Question

The fiscal 2016 financial statements of Nike Inc. shows average net operating assets (NOA) of $8,450 million, average net nonoperating obligations (NNO) of $(4,033) million, average total liabilities of $9,014 million, and average equity of $12,483 million. The company's 2016 financial leverage (FLEV) is: Select one: A. (0.477) B. (0.559 C. (0.323) D. (0.447) E. There is not enough information to determine the ratio.

Answer 1

Answer:

C. (0.323)

Explanation:

The computation of financial leverage is shown below:

= (Average net nonoperating obligations) ÷ ( average equity)

= ($4,033 million) ÷ ($12,483 million)

= (0.323)

In order to find out the financial leverage, we deduct the average net non-operating obligations by the average equity so that the financial leverage could come