Retained Earnings and EPS

Nike Inc. reports retained earnings in the consolidated statement of financial position. It is reported as a single item in the liabilities and equity section. For the latest reporting period filed with the securities exchange, the company reported retained earnings of $965,000 (SEC, 2024). Further, the company reports earnings per share in the notes to the financial statements under note 10: Retained Earnings and EPS.

The earnings per share of Nike Inc. for the latest fiscal period was $3.76 per basic common share and $3.73 per diluted common share. What stands out for me in the reporting done by Nike Inc. is that there is no difference between the elements captured in the income statement and the notes to the financial statements regarding earnings per share. Notably, this prompts whether reporting for earnings per share requires disclosure beyond the income statement information. Overall, Nike appears to be paying dividends regularly at a rate of about 1% of net income.

Adidas Inc. reports retained earnings in the statement of financial position. The retained earnings for the company were $4,145,000 for 2023 (Adidas, 2024). Other information related to retained earnings is included in the notes for shareholder’s equity in the notes to the financial statements. Retained earnings are reported as a single item in the balance sheet.

Notably, this reporting is by what companies should report (Wahlen et al., 2013). However, there is a need to evaluate if reporting retained earnings has specific requirements that should be met in the notes in the financial statements. The company reported earnings per share of (0.67) for the fiscal period that ended in 2023.

The figure is negative because the company reported a net loss for the reporting period. What stands out for me is the reporting of a negative figure for earnings per share and it prompts the question of whether it is a mandatory reporting requirement for companies to report earnings per share even when a loss is made. Notably, no dividends were reported in the same period.

Reference

Adidas. (2024). Annual Report. https://report.adidas-group.com/2023/en

SEC. (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. https://www.cengage.uk/c/intermediate-accounting-reporting-and-analysis-4e-

wahlen-jones-pagach/9780357905708/?filterBy=Higher-Education

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COMPANIES: Nike and Addidas

Topic: Retained earnings and EPS

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.
   

   Retained Earnings and EPS

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. Based on the information you see in the most recent 10-K, do your companies appear to pay dividends on a regular basis? If they do, what percentage of net income do they pay on a regular basis?