Equity Financing

Nike Inc. reports equity financing on the consolidated statement of financial position. Equity financing is further reported in the notes to the financial statements under note 9. Nike Inc. reported $14,430,000 in shareholders equity (SEC, 2024). Notably, this figure comprises common stock at the stated value, capital exceeding the stated value, accumulated comprehensive income, and retained earnings: Equity Financing.

In the notes to the financial statements, the breakdown and explanation for the various categories of shareholder’s equity are provided. After studying the chapter, it is apparent that the company’s reporting is in line with the set reporting guidelines, whereby notes to financial statements provide support for all stated figures for shareholders’ equity elements (Wahlen et al., 2013). What stands out regarding this reporting is how every aspect is detailed. However, I have a question for consideration:

• Why does the company separate the retained earnings element of shareholder’s equity from accumulated comprehensive income?

Adidas Inc. reports its equity financing as shareholder’s equity in the balance sheet. The breakdown for the shareholder’s equity entails share capital, reserves, and retained earnings. Further, the shareholder’s equity is composed of non-controlling interests that are reported separately.

More information regarding equity financing is provided in the notes to the financial statements under note 25 (Adidas, 2024). However, I take note that notes relating to non-controlling interests are separately reported under note 27. It is for this reason that I have the question below for discussion.

• Are the reporting requirements for shareholder’s equity different for controlling and non-controlling interests?

Looking at how the two companies declare and pay dividends, a similar strategy is applied. Even though the payout rates are different, the criteria adopted are similar. Notably, this is a significant observation because the two companies have different classes of shares. Also, the amounts paid out as dividends are different.

References

Adidas. (2024). Annual Report. https://report.adidas-group.com/2023/enSEC. (2024). Nike Inc. 10-k forms.

https://www.sec.gov/Archives/edgar/data/320187/000032018724000044/nke-20240531.htm

Wahlen, J. M., Jones, J. P., & Pagach, D. P. (2013). Intermediate accounting: Reporting and Analysis. Cengage Learning

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Companies: Nike and Adidas.

Topic: Equity Financing 

1. Where in your companies’ most recent 10-K do they report items related to this topic? It may be included in the income statement, the balance sheet, or the notes. It may have its own line item or it may be summarized into a broader category.
   After reading and studying the chapter, identify what the companies should be reporting and where it should be. Distinguish between required reporting and reporting that will only happen under specific circumstances.
2. Look for and read through your companies’ reporting on this topic. What stands out to you in their reporting? What elements of their reporting do you have questions about? List some of those questions here so we can address them in class.
3. Do you companies appear to have similar strategies for the amount of dividends they declare and pay? Explain.
   

   Equity Financing