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Nike business analysis
Nike business analysis
Case study of nike company
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Nike Financial Analysis Investing in a company has certainly changed over the years. Financial information is literally at one's fingertips via the internet. In today's fast paced corporate environment companies are under tremendous scrutiny to maintain their edge. The company I am evaluating is NIKE. This Financial analysis will consist of the following: Ratios from the Income Statement, Statement of Owner's Equity, and Balance Sheet. This information is designed to assist a potential investor. Nike's mission is complex. Listed below is a copy of Nike's company philosophy. Company Philosophy: WE ARE ABOUT DREAMS. Nike was, is, and will always be a company driven by certain key philosophies. What are they? First and foremost, we are a company dedicated to innovation and the passion to create great product. From Bowerman's Waffle Trainer to the Tour Accuracy golf ball, we make every effort to take consumers where they want to go before they realize they want to go there. WE ARE ABOUT THE CONSUMER. The consumer rules the roost. They make the important decisions. I answer to them, as we all do. The opinions of Wall Street analysts and media pundits are really just derivatives of our relationship with our consumers. When the young at heart seek out our products, when they respond to our messages and believe in what we stand for, when our relationship with consumers is healthy, that's when we grow. Even so, gaining true understanding of our consumers, and thereby being able to deliver meaningful innovation to them, is a huge challenge. It's not the demographics that change; it's the deliverables. Ours is a constantly moving target. Technology continues to increase the pace and volume of options in all of our lives. ... ... middle of paper ... ...59 This ratio must appear on the face of a company's income statement. Nike (EPS) is up from 1.35 in 2008. This is another sign of a strong company, although it is not uncommon for a company to have a down year. These ratios show the following: · Nike has a very good ability to pay current liabilities. This was evident in the current ratio and the acid test. · Nike has an excellent ability to pay short term and long-term debt. This was proven in the debt ratio and times-interest-earned ratio. Nike is a solid company in 2009, from a profitability stand point. This was apparent in the Rates of return on sales, assets, and common stockholder equity. I would recommend Nike to a potential investor because of the reasons listed above, in this analysis. I would also recommend a thorough analysis of the Industry by researching at least tow of Nike's closest competitors.
The Company that I will conduct a financial research report is Footlocker Incorporated. I choose Footlocker Inc., because I am an assistant manager with the company, and have experience dealing with Footlocker’s stock, 401k retirement plan’s and choose the company to conduct financial research on because it would give me a broader insight on how the company that I am employed by conducts certain types of business structure, as well as how the company operates on a larger scale, how the company is traded and how the structure of Footlocker is organized. Since the inception of the company in technical terms Footlocker Inc., was originally established in 1879 as the Great 5 cent store in Utica, New York by Frank Woolworth. ("Funding universe-footlocker,
My estimate of Nike's cost of equity is 10.5%. I used the current yield on 20-year Treasury bonds as my risk-free rate, and the compound average premium of the market over Treasury bonds (5.9%) as my risk premium. For beta, I took the average of Nike's betas from 1996 to the present.
The name Nike is derived from the Greek goddess of victory which is exactly what Nike has over its competitors. Nike has been around for 53 years starting in 1964 and is the leading revenue sports goods company in the world with 34.35 billion US dollars in revenue in 2017. It is not only the biggest sports brand but also one of the three largest apparel companies in the world along with Christian Dior and Zara. It is such a prominent brand that almost everyone has used a Nike product in their lifetime. CEO Mark Parker wrote, “like athletes all over the globe, Nike’s future holds nothing but limitless potential”. Everyone is confident in Nike and their ability to continue creating and producing high quality products that everyone can enjoy.
There are a few positive variables showing the future wellbeing of the organization. One proportion that shows the positive monetary wellbeing is the speedy proportion. The fast proportion, otherwise called the basic analysis proportion, is a liquidity estimation that measures the organization's capacity to pay off here and now commitments without depending discounted of inventories (Brigham, Daves, Ehrhardt, 2013). Under Armor's snappy proportion for as long as three years was 1.29 for 2013, 2.05 for 2014, and 1.16 for 2015. For examination, Nike's present proportion for 2015 was 1.47 and Adidas current proportion for 2014 was 0.92. The accompanying diagram shows the yearly snappy proportion and the contender
Though UA has a much lower amount for current liabilities and other short-term debt ratios; Nike is still better equipped to handle long-term debts. “Nike is more suitable to meet working capital obligations compared to Under Armour, who holds a significant amount of their current assets in inventory” (Durante, 2015). Nike’s debts to assets ratio is .41, compared to UA’s .36. Nike also has a much higher times interest earned ratio, 151.18 vs. Under Armour’s
Nike’s goal is to remain unique and different from others in terms of the items offered on the market. Arguably, Nike belongs to a monopolistically competitive market as there only a few organizations with the ability to regulate the amount charged for their product which means they cannot make their prices high as this is likely to make customers move on to other available choices (Nike, Inc., 2012). However, Nike can find a balance between the prices to charge for their products and remaining competitive with other companies in the industry. Nike has formed a distinction between the appearance and performance of their footwear and that of their competitors. Although products are differentiated from other companies, they still influence each other because they are items of the same
Financial statements are a vital factor of any business organization; they show where a company’s money came from, where it went, and where it is now, according to Securities and Exchange Commission website (2008). In addition, four main financial statements consist of the balance sheet, income statement, cash flow statement, and statement of shareholders’ equity. These four financial statements will be evaluated from Nike Inc. and more in depth information will be included from information on the previous paper which will be link to the working capital strategies. Furthermore, a detail working capital recommendation to senior management will be included and the impact of Nike Inc. revenue increase of their working capital.
During Nike Inc. meeting, it was decided that the company could increase revenue by producing more athletic shoes products for the mid-price segment as well as developing their apparel segment and getting more control on their expenses. The analysts projected a long-term revenue growth target at 8-10% and earnings-growth target above 15%.
Monea, M. (2009). Financial ratios – Reveal how a business is doing? Annals of the University Of Petrosani Economics, 9(2), 137-144. Retrieved from http://www.upet.ro/eng
Nike’s Asian operations had previously continued to soar generating US$300 million in 1994 in revenues to a whopping US$1.2 billion in 1997. However based on the Asian economic crisis, this had adversely affected revenues, while regional layoffs were inevitable. Nike also performed well in the European market generating about US$2 billion in sales and a good growth momentum was expected, however, some parts of Europe were only slowly recovering from an economic downturn. In the Americas (Canada and the U.S.A.), Nike experienced a growth rate for several quarters. The U.S. alone generated approximately US$5 billion in sales. The Latin American market at this point was exposed to economic volatility; however Nike still saw them as a market with “great potential for the future”.
The creators of Nike Phil Knight and Bill Bowerman began in 1964, they used be name Blue Ribbon Sports. Little be known an athlete and track coach at University of Oregon would be on their way to create one of the most well known athletic brands today. At first, they began as an athletic Japanese shoe supplier and then eventually became what we know now as Nike. To this day they are the main supplier of athletic clothing, shoes, accessories today! Nike is one of the top sponsors for athletes, to name a few Michael Jordan, LeBron James, and Kobe Bryant are all phenomenal basketball players. Although Nike continues to revolutionize athletic wear and staying as number one on the leader board, such achievement wasn’t always there
In order to boost revenue, management decided to develop more athletic-shoe products in the midpriced segment, which are sold for $70-$90 a pair. As for the cost side to be considered, Nike planned to put more effort into expense control. The company executives forecasted long-term revenue growth targets of 8% to 10% and earnings growth targets of above 15%. In order to make an investment decision regarding the mutual fund she managed, Ford decided to develop her own discounted cash flow forecast. Since Ford was not sure whether to buy the stock, she asked Cohen to estimate
Nike is the number one innovator in the world in athletic footwear, apparel, equipment, and accessories. This worldwide company operates in an extremely different organizational structure than other companies, such as Reebok and Adidas. Nike operates tremendous marketing strategies and develops inventive designs to inspire athletes around the world. This company is one of the largest suppliers in the world in athletic footwear and apparel, main producer of sports equipment, and making Nike the most valuable brand among sports companies. The task for Nike is to join diversity and inclusion to encourage ideas and innovation. Around the world, this company is a popular brand.
Any successful business owner or investor is constantly evaluating the performance of the companies they are involved with, comparing historical figures with its industry competitors, and even with successful businesses from other industries. To complete a thorough examination of any company's effectiveness, however, more needs to be looked at than the easily attainable numbers like sales, profits, and total assets. Luckily, there are many well-tested ratios out there that make the task a bit less daunting. Financial ratio analysis helps identify and quantify a company's strengths and weaknesses, evaluate its financial position, and shows potential risks. As with any other form of analysis, financial ratios aren't definitive and their results shouldn't be viewed as the only possibilities. However, when used in conjuncture with various other business evaluation processes, financial ratios are invaluable. By examining Ford Motor Company's financial ratios, along with a few other company factors, this report will give a clear picture of how the company is doing now and should do in the future.