Question: Footnote 18 to Nike s 2011 financial statements in Appendix C
Footnote 18 to Nike’s 2011 financial statements in Appendix C shows net corporate expenses of $771 million as well as revenues and earnings before interest and taxes by geographical areas. Suppose that Nike wants to allocate its net corporate expenses to the following six geographic regions on the basis of the revenues of the regions: North America, Western Europe, Central & Eastern Europe, Greater China, Japan, and Emerging Markets. Compute the earnings before interest and taxes for each region after the allocation. Comment on the desirability of this allocation.
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