This document provides an analysis of financial ratios for Nike from 2013 to 2014. It includes profitability ratios like return on equity and net profit margin, stability ratios like working capital ratio and total debt ratio, and price/earnings ratios. Based on the analysis, the document recommends against investing in Nike due to a high price/earnings ratio and issues with controlling expenses. While net profits increased, it would take a long time for investors to earn back their initial investment.
Erectile Dysfunction (ED) is a common male sexual disorder characterized by the inability to attain and sustain an erection. Medicines like Viagra, Cialis and Levitra are effective against ED, but they come with certain side effects. Let’s discuss about 10 foods that can work as natural Viagra and help men overcome ED.
The assignment assist students in developing a better appreciation in ratio analysis and interpretation as a tool for evaluating real-world companies. By reading and analysing the annual reports of publicly-traded companies, students can acquire valuable skills such as deciphering the various details contained in an accounting report, give informed opinions about the company’s business operations and make recommendations regarding the worthiness of the business’ common shares as an investment medium.
BackgroundNike, originally called Blue Ribbon Sports (BRS), was.docxikirkton
Background:
Nike, originally called Blue Ribbon Sports (BRS), was founded by University of Oregon track athlete Philip Knight and his coach Bill Bowerman in January 1964 and then in 1971 it was officially called Nike, Greek name of the Goddess of victory. Nike is a USA multinational company that specialize in designing, developing and manufacturing of footwear, apparel, equipment and accessories. The company Headquarter is in Washington County, Oregon, in the Portland metropolitan area (Sage, 2008). Nike is present everywhere in the world thanks to its advanced supply chain and its broad line of products that it markets under its own brand, as well as Nike Golf, Nike Pro, Nike+, Air Jordan, Nike Blazers, Air Force 1, Nike Dunk, Air Max, Foamposite, Nike Skateboarding, and subsidiaries including Brand Jordan, Hurley International and Converse. Nike also sponsors high profile athletes like golf super star Tiger Woods under Nike golf and Also soccer Super star Cristiano Ronaldo and so many other Brilliant Athletes.
Nike has offices located in 45 countries outside the United States. Most of the factories are located in Asia, including Indonesia, China, Taiwan, India, Thailand, Vietnam, Pakistan, Philippines, and Malaysia. Also, Nike employees more than 62,600 full-time employees as of the last fiscal year (Mergent, 2015). Nike is considered the major sports equipment supplier in the world, with more than $30 billion in revenues made in the fiscal year of 2015. In addition, Nike has a Market capitalization of $79 billion, net income of $3 billion with dividends of 1.12 and dividend yield of 0.96 (Mergent, 2015).
Nike’s CEO Mark Parker aged 59 years was leading the company in other ways way before he took the position of the CEO. He was a competitive runner at the Penn State University, when he joined Nike as the first footwear designer back in 1979 and was the center of innovation since then. For 30 years in the company he took the position of Vice President of global footwear and co-president of the Nike brand. He also was the leader in many industry breakthroughs in product design. Parker was also the leader in Nike’s global growth which included the acquisition of Converse and Hurley International LLC (Nike, 2015).
Financial Statements:
Standardized Annual Income Statement
Report Date
05/31/2015
Currency
USD
Scale
Thousands
Total Revenue
30601000
Direct Costs
16534000
Gross Profit
14067000
Selling General & Admin
9892000
Other Operating Expense
-58000
Total Indirect Operating Costs
9834000
Operating Income
4233000
Interest Income
-28000
Other Non-Operating Income
0
Total Non-Operating Income
-28000
Earnings Before Tax
4205000
Taxation
932000
Earnings After Tax
3273000
Discontinued Operations
-
Extraordinary Items
0
Accounting Changes
0
Net Income
3273000
(Mergent, 2015)
Nike Total revenues in 2015 were $30.6 billion, while direct costs were $16.5 billion leading to a gross profit of $14.1 billion. After deducting total operating cost, operat ...
Erectile Dysfunction (ED) is a common male sexual disorder characterized by the inability to attain and sustain an erection. Medicines like Viagra, Cialis and Levitra are effective against ED, but they come with certain side effects. Let’s discuss about 10 foods that can work as natural Viagra and help men overcome ED.
The assignment assist students in developing a better appreciation in ratio analysis and interpretation as a tool for evaluating real-world companies. By reading and analysing the annual reports of publicly-traded companies, students can acquire valuable skills such as deciphering the various details contained in an accounting report, give informed opinions about the company’s business operations and make recommendations regarding the worthiness of the business’ common shares as an investment medium.
BackgroundNike, originally called Blue Ribbon Sports (BRS), was.docxikirkton
Background:
Nike, originally called Blue Ribbon Sports (BRS), was founded by University of Oregon track athlete Philip Knight and his coach Bill Bowerman in January 1964 and then in 1971 it was officially called Nike, Greek name of the Goddess of victory. Nike is a USA multinational company that specialize in designing, developing and manufacturing of footwear, apparel, equipment and accessories. The company Headquarter is in Washington County, Oregon, in the Portland metropolitan area (Sage, 2008). Nike is present everywhere in the world thanks to its advanced supply chain and its broad line of products that it markets under its own brand, as well as Nike Golf, Nike Pro, Nike+, Air Jordan, Nike Blazers, Air Force 1, Nike Dunk, Air Max, Foamposite, Nike Skateboarding, and subsidiaries including Brand Jordan, Hurley International and Converse. Nike also sponsors high profile athletes like golf super star Tiger Woods under Nike golf and Also soccer Super star Cristiano Ronaldo and so many other Brilliant Athletes.
Nike has offices located in 45 countries outside the United States. Most of the factories are located in Asia, including Indonesia, China, Taiwan, India, Thailand, Vietnam, Pakistan, Philippines, and Malaysia. Also, Nike employees more than 62,600 full-time employees as of the last fiscal year (Mergent, 2015). Nike is considered the major sports equipment supplier in the world, with more than $30 billion in revenues made in the fiscal year of 2015. In addition, Nike has a Market capitalization of $79 billion, net income of $3 billion with dividends of 1.12 and dividend yield of 0.96 (Mergent, 2015).
Nike’s CEO Mark Parker aged 59 years was leading the company in other ways way before he took the position of the CEO. He was a competitive runner at the Penn State University, when he joined Nike as the first footwear designer back in 1979 and was the center of innovation since then. For 30 years in the company he took the position of Vice President of global footwear and co-president of the Nike brand. He also was the leader in many industry breakthroughs in product design. Parker was also the leader in Nike’s global growth which included the acquisition of Converse and Hurley International LLC (Nike, 2015).
Financial Statements:
Standardized Annual Income Statement
Report Date
05/31/2015
Currency
USD
Scale
Thousands
Total Revenue
30601000
Direct Costs
16534000
Gross Profit
14067000
Selling General & Admin
9892000
Other Operating Expense
-58000
Total Indirect Operating Costs
9834000
Operating Income
4233000
Interest Income
-28000
Other Non-Operating Income
0
Total Non-Operating Income
-28000
Earnings Before Tax
4205000
Taxation
932000
Earnings After Tax
3273000
Discontinued Operations
-
Extraordinary Items
0
Accounting Changes
0
Net Income
3273000
(Mergent, 2015)
Nike Total revenues in 2015 were $30.6 billion, while direct costs were $16.5 billion leading to a gross profit of $14.1 billion. After deducting total operating cost, operat ...
Running head GLOBAL STRATEGIC ANALYSIS-NIKEGLOBAL STRATEGIC ANA.docxcowinhelen
Running head: GLOBAL STRATEGIC ANALYSIS-NIKE
GLOBAL STRATEGIC ANALYSIS-NIKE 20
Global Strategic Analysis-Nike
Name
Institution
Executive Summary
In the business world today, organizations have decided to market their products at an international level. This means that there is the use of bigger resources in terms of manpower, technology, and other resources which support the industrial business activities. However, despite the fact that most of the MNEs have the resources and capabilities to take their businesses global, there still is a need for them to develop strategies which will be used as guidance for the entire activities of the business both in the local market environments and in the global markets. This report hence is meant to give a global strategic analysis of a firm, in this case, the Nike Company, and provide a suitable internationalization plan for the company. First, a global strategy can be defined as business activities in organizations which act as the organization's strategic guide to globalization. This means that as the world becomes much more interconnected, businesses too are allowed to expand their revenue areas to outside the borders of the company's parent nation. Globalization does not just mean having a business in one foreign nation but several. This comes with milestones such as changing cultures, laws, and competitors who the MNE has to be able to handle in order to be successful in its expansion plans. A global business strategy such as the one used by the Nike Company is meant to ensure the business has the ability to benefit from the vast opportunities and rewards which come with worldwide trading (Marc J. et al 2010)
In order to proficiently write this analysis, the main elements were divided into some eight groups which include an overview of our chosen company together with its strategic background, the condition of the industry of the company, the company's capabilities and strengths internally, its cultural conditions as an institution, analysis of the company's industrialization efforts, and finally, an analysis of the governance and corporate social responsibility of the company.
Contents
Executive Summary 1
Overview and Key Strategic Background of Nike 3
Characteristics 3
Current International Operations 5
Recent Strategic Initiatives 6
Domestic and International Rivals 7
Tripod 1: Industry Conditions. 8
Top five markets 8
Five forces affecting Nike's industry. 8
Key Competitiveness of Nike in Value chain. 10
Competitiveness of Generic Strategy. 10
Strategy Tripod 2: Internal Resources and Capabilities. 11
Strategy tripod 3: Institutional and Cultural Conditions. 12
Entrepreneurship and Internationalization of the Firm. 14
Internationalization 15
Internationalization: Structure, Strategy, and Learning. 16
Strategizing governance and Corporate Social Responsibility. 17
References. 19
Appendices 20
Overview and Ke ...
The Secret to Engaging Modern Consumers: Journey Mapping and Personalization
In today's digital landscape, understanding the customer's journey and delivering personalized experiences are paramount. This masterclass delves into the art of consumer journey mapping, a powerful technique that visualizes the entire customer experience across touchpoints. Attendees will learn how to create detailed journey maps, identify pain points, and uncover opportunities for optimization. The presentation also explores personalization strategies that leverage data and technology to tailor content, products, and experiences to individual customers. From real-time personalization to predictive analytics, attendees will gain insights into cutting-edge approaches that drive engagement and loyalty.
Key Takeaways:
Current consumer landscape; Steps to mapping an effective consumer journey; Understanding the value of personalization; Integrating mapping and personalization for success; Brands that are getting It right!; Best Practices; Future Trends
Mastering Local SEO for Service Businesses in the AI Era is tailored specifically for local service providers like plumbers, dentists, and others seeking to dominate their local search landscape. This session delves into leveraging AI advancements to enhance your online visibility and search rankings through the Content Factory model, designed for creating high-impact, SEO-driven content. Discover the Dollar-a-Day advertising strategy, a cost-effective approach to boost your local SEO efforts and attract more customers with minimal investment. Gain practical insights on optimizing your online presence to meet the specific needs of local service seekers, ensuring your business not only appears but stands out in local searches. This concise, action-oriented workshop is your roadmap to navigating the complexities of digital marketing in the AI age, driving more leads, conversions, and ultimately, success for your local service business.
Key Takeaways:
Embrace AI for Local SEO: Learn to harness the power of AI technologies to optimize your website and content for local search. Understand the pivotal role AI plays in analyzing search trends and consumer behavior, enabling you to tailor your SEO strategies to meet the specific demands of your target local audience. Leverage the Content Factory Model: Discover the step-by-step process of creating SEO-optimized content at scale. This approach ensures a steady stream of high-quality content that engages local customers and boosts your search rankings. Get an action guide on implementing this model, complete with templates and scheduling strategies to maintain a consistent online presence. Maximize ROI with Dollar-a-Day Advertising: Dive into the cost-effective Dollar-a-Day advertising strategy that amplifies your visibility in local searches without breaking the bank. Learn how to strategically allocate your budget across platforms to target potential local customers effectively. The session includes an action guide on setting up, monitoring, and optimizing your ad campaigns to ensure maximum impact with minimal investment.
Come learn how YOU can Animate and Illuminate the World with Generative AI's Explosive Power. Come sit in the driver's seat and learn to harness this great technology.
Search Engine Optimization Strategies for Local Businesses.pdfseodigitalbraino
Maximize your online presence and drive growth with Digital Braino, your go-to for digital marketing services in Indore. Our expert team specializes in a wide range of services including SEO, social media marketing, content creation, and online advertising. With our innovative strategies and client-focused approach, we help businesses enhance their online presence and achieve their marketing objectives. Let Digital Braino propel your business to new heights.
Mastering Local SEO for Service Businesses in the AI Era is tailored specifically for local service providers like plumbers, dentists, and others seeking to dominate their local search landscape. This session delves into leveraging AI advancements to enhance your online visibility and search rankings through the Content Factory model, designed for creating high-impact, SEO-driven content. Discover the Dollar-a-Day advertising strategy, a cost-effective approach to boost your local SEO efforts and attract more customers with minimal investment. Gain practical insights on optimizing your online presence to meet the specific needs of local service seekers, ensuring your business not only appears but stands out in local searches. This concise, action-oriented workshop is your roadmap to navigating the complexities of digital marketing in the AI age, driving more leads, conversions, and ultimately, success for your local service business.
Key Takeaways:
Embrace AI for Local SEO: Learn to harness the power of AI technologies to optimize your website and content for local search. Understand the pivotal role AI plays in analyzing search trends and consumer behavior, enabling you to tailor your SEO strategies to meet the specific demands of your target local audience. Leverage the Content Factory Model: Discover the step-by-step process of creating SEO-optimized content at scale. This approach ensures a steady stream of high-quality content that engages local customers and boosts your search rankings. Get an action guide on implementing this model, complete with templates and scheduling strategies to maintain a consistent online presence. Maximize ROI with Dollar-a-Day Advertising: Dive into the cost-effective Dollar-a-Day advertising strategy that amplifies your visibility in local searches without breaking the bank. Learn how to strategically allocate your budget across platforms to target potential local customers effectively. The session includes an action guide on setting up, monitoring, and optimizing your ad campaigns to ensure maximum impact with minimal investment.
Most small businesses struggle to see marketing results. In this session, we will eliminate any confusion about what to do next, solving your marketing problems so your business can thrive. You’ll learn how to create a foundational marketing OS (operating system) based on neuroscience and backed by real-world results. You’ll be taught how to develop deep customer connections, and how to have your CRM dynamically segment and sell at any stage in the customer’s journey. By the end of the session, you’ll remove confusion and chaos and replace it with clarity and confidence for long-term marketing success.
Key Takeaways:
• Uncover the power of a foundational marketing system that dynamically communicates with prospects and customers on autopilot.
• Harness neuroscience and Tribal Alignment to transform your communication strategies, turning potential clients into fans and those fans into loyal customers.
• Discover the art of automated segmentation, pinpointing your most lucrative customers and identifying the optimal moments for successful conversions.
• Streamline your business with a content production plan that eliminates guesswork, wasted time, and money.
Trust Element Assessment: How Your Online Presence Affects Outbound Lead Gene...Martal Group
Learn how your business's online presence affects outbound lead generation and what you can do to improve it with a complimentary 13-Point Trust Element Assessment.
What’s “In” and “Out” for ABM in 2024: Plays That Help You Grow and Ones to L...Demandbase
Delve into essential ABM ‘plays' that propel success while identifying and leaving behind tactics that no longer yield results. Led by ABM Experts, Jon Barcellos, Head of Solutions at Postal and Tom Keefe, Principal GTM Expert at Demandbase.
Everyone knows the power of stories, but when asked to come up with them, we struggle. Either we second guess ourselves as to the story's relevance, or we just come up blank and can't think of any. Unlocking Everyday Narratives: The Power of Storytelling in Marketing will teach you how to recognize stories in the moment and to recall forgotten moments that your audience needs to hear.
Key Takeaways:
Understand Why Personal Stories Connect Better
How To Remember Forgotten Stories
How To Use Customer Experiences As Stories For Your Brand
The Forgotten Secret Weapon of Digital Marketing: Email
Digital marketing is a rapidly changing, ever evolving industry--Influencers, Threads, X, AI, etc. But one of the most effective digital marketing tools is also one of the oldest: Email. Find out from two Houston-based digital experts how to maximize your results from email.
Key Takeaways:
Email has the best ROI of any digital tactic
It can be used at any stage of the customer journey
It is increasingly important as the cookie-less future gets closer and closer
It's another new era of digital and marketers are faced with making big bets on their digital strategy. If you are looking at modernizing your tech stack to support your digital evolution, there are a few can't miss (often overlooked) areas that should be part of every conversation. We'll cover setting your vision, avoiding siloes, adding a democratized approach to data strategy, localization, creating critical governance requirements and more. Attendees will walk away with actions they can take into initiatives they are running today and consider for the future.
Videos are more engaging, more memorable, and more popular than any other type of content out there. That’s why it’s estimated that 82% of consumer traffic will come from videos by 2025.
And with videos evolving from landscape to portrait and experts promoting shorter clips, one thing remains constant – our brains LOVE videos.
So is there science behind what makes people absolutely irresistible on camera?
The answer: definitely yes.
In this jam-packed session with Stephanie Garcia, you’ll get your hands on a steal-worthy guide that uncovers the art and science to being irresistible on camera. From body language to words that convert, she’ll show you how to captivate on command so that viewers are excited and ready to take action.
When most people in the industry talk about online or digital reputation management, what they're really saying is Google search and PPC. And it's usually reactive, left dealing with the aftermath of negative information published somewhere online. That's outdated. It leaves executives, organizations and other high-profile individuals at a high risk of a digital reputation attack that spans channels and tactics. But the tools needed to safeguard against an attack are more cybersecurity-oriented than most marketing and communications professionals can manage. Business leaders Leaders grasp the importance; 83% of executives place reputation in their top five areas of risk, yet only 23% are confident in their ability to address it. To succeed in 2024 and beyond, you need to turn online reputation on its axis and think like an attacker.\
Key Takeaways:
- New framework for examining and safeguarding an online reputation
- Tools and techniques to keep you a step ahead
- Practical examples that demonstrate when to act, how to act and how to recover
Turn Digital Reputation Threats into Offense Tactics - Daniel Lemin
Basic accounting assignment
1. 1| F N B E 0 4 1 4 | B a s i c A c c o u n t i n g | F i n a n c i a l R a t i o A n a l y s i s
FOUNDATION IN NATURAL AND BUILT ENVIRONMENT
BASIC ACCOUNTING ACC 30205
ASSINGMENT 1 FINANCIAL REPORT
GROUP MEMBERS:
1. Yong Sing Yew 0318766
2. Kong Zhen Chung 0319528
3. Welson Lum Wei Jiunn 0319514
COMPANY: Nike’s Company
LECTURER: Mr. Chang Jau Ho
SUBMISSION DATE: 16 January 2015
2. 2| F N B E 0 4 1 4 | B a s i c A c c o u n t i n g | F i n a n c i a l R a t i o A n a l y s i s
TABLE CONTENTS
1. HISTORY AND BACKGROUND 3
2. RECENT DEVELOPMENT OF NIKE COMPANY 4
3. PROFITABILITY RATIOS 5 - 6
4. STABILITY RATIOS 7 - 8
5. PRICE / EARNING RATIOS 9
6. INVESTMENT RECOMMENDATION 10
7. APPENDIX 11 - 15
8. REFERENCES 16
3. 3| F N B E 0 4 1 4 | B a s i c A c c o u n t i n g | F i n a n c i a l R a t i o A n a l y s i s
History & Background of Nike
Nike is the world leader in athletic shoes. The company rose quickly from small-time sales at
track meets to a major publicly-traded Fortune 500 company. Throughout its history and
background, Nike has utilized strong advertising campaigns to separate itself from its
competition. Two of the most memorable marketing campaigns, "Just Do It" and the Air Jordan
brand, cemented Nike as one of the most popular shoe brands in the world.
Nike began its history as Blue Ribbon Sports in 1964 at the University of Oregon. Track star
Philip Knight and his coach Bill Bowerman distributed Japanese Onitsuka Tiger shoes at track
meets. The first retail location for the company opened in 1966 in Santa Monica, California. As
the relationship between Blue Ribbon Sports and Onitsuka Tiger ended in 1971, the company
launched its own line known simply as "Nike."
Nike successfully garnered 50 percent of the market share within the United States by 1980, the
same year the company went public. The advertising firm in charge of Nike, Wieden+Kennedy,
coined one of the most famous phrases in marketing history in 1988. The "Just Do It" was named
one of the top five slogans of all time by a 1999 article in "Advertising Age."
In 1984, Nike's sales were in decline. In response, the company hired rookie basketball player
Michael Jordan to be the company spokesman. The $2.5 million deal for five years resulted in
the creation of one of the most popular lines of shoes ever made.
4. 4| F N B E 0 4 1 4 | B a s i c A c c o u n t i n g | F i n a n c i a l R a t i o A n a l y s i s
RECENT DEVELOPMENT OF NIKE
Nike’s company has been 51 years since 1964 as a Blue Ribbons Sports. It already
expanding its franchise around the world. After Nike entering the International market, it starting
to sell different sports equipment likes soccer, basketball, running, golf, combat sports, tennis,
baseball, cycling, volleyball, auto racing, aquatic activities and recreational uses. Currently,
Nike’s company has 756 retail stores throughout the entire world. Nike also pay top athletes
which from different sports to use their products as a way to promote their equipment’s
technology and design. The example of top athletes that sponsor by Nike are Cristiano Ronaldo,
Wayne Rooney and Neymar who professional in soccer and Michael Jordan, Kobe Bryant and
Lebron James who professional in basketball. The most interesting part about Nike is it has run a
program which is NikeID. NikeID is a service provided to allow the customers to personalize or
design their own Nike merchandise. Nike + also one of the Nike’s successful business product.
Nike + is an activity tracker device that attached to the Nike’s shoes that can communicates with
the Nike +sport band, iPod and iPhone. The purpose of Nike + is help to identify the time of
workout, the distance traveled, calories burned and heartbeat rate.
5. 5| F N B E 0 4 1 4 | B a s i c A c c o u n t i n g | F i n a n c i a l R a t i o A n a l y s i s
PROFITABILITY RATIOS
Profitability Ratios 2013 2014
Return on Equity
(ROE) ratio
Net Profit
Average O/E
x 100%
=
2472
10731
x 100%
=23.04%
Net Profit
Average O/E
x 100%
=
2693
10952 .5
x 100%
=24.59%
Net Profit Margin
(NPM) ratio
Net Profit
Net Sales
x 100%
=
2472
25313
x 100%
=10%
Net Profit
Net Sales
x 100%
=
2693
27799
x 100%
=10%
Gross Profit Margin
(GPM) ratio
Gross Profit
Net Sales
x 100%
=
11034
25313
x 100%
=44%
Gross Profit
Net Sales
x 100%
=
12446
27799
x 100%
=45%
Selling Expense
Ratio (SER)
Total Selling Expenses
Net Sales
x 100%
=
7796
25313
x 100%
=31%
Total Selling Expenses
Net Sales
x 100%
=
8766
27799
x 100%
=32%
General Expense
Ratio (GER)
Total General Expense
Net Sales
x 100%
=
7796
25313
x 100%
=31%
Total General Expense
Net Sales
x 100%
=
8766
27799
x 100%
=32%
Financial Expense
Ratio (FER)
Total Financial Expense
Net Sales
x 100%
=
805
25313
x 100%
=3.2%
Total Financial Expense
Net Sales
x 100%
=
851
27799
x 100%
=3.1%
6. 6| F N B E 0 4 1 4 | B a s i c A c c o u n t i n g | F i n a n c i a l R a t i o A n a l y s i s
PROFITABILITY RATIOS INTERPRETATION
Return on Equity (ROE)
During the 2013-2014 period, the business Return on Equity (ROE) increased from 23.04% to
24.59%. This means the Nike’s company is getting more return from its capital.
Net Profit Margin (NPM)
During the 2013-2014 period, the business Net Profit Margin (NPM) remain constant with 10%.
This means that the Nike’s company is maintaining their expenses.
Gross Profit Margin (GPM)
During 2013-2014 period, the business Gross Profit Margin (GPM) has increased from 44% to
45%. This means the Nike’s company is getting better in Cost of goods sold (COGS) expenses.
Selling Expenses (SER)
During 213-2014 period, the business Selling Expenses (SER) has decreased from 31% to 32%.
This means the Nike’s company is getting worse at controlling their selling expenses.
General Expenses (GER)
During 2013-2014 period, the business General Expenses (GER) has decreased from 31% to
32%. This means the Nike’s company is getting worse at controlling general expenses.
Financial Expenses Ratio (FER)
During 2013-2014 period, the business Financial Expenses Ratio (FER) has decreased from
3.2% to 3.1%. This means the business is getting better in controlling their financial expenses.
7. 7| F N B E 0 4 1 4 | B a s i c A c c o u n t i n g | F i n a n c i a l R a t i o A n a l y s i s
STABILITY RATIOS
Financial Stability
Ratios
2013 2014
Working Capital
ratio (WCR)
Total Current Asset
Total Current Liabilities
=
13630
3962
: 1
=3.4 : 1
Total Current Asset
Total Current Liabilities
=
13696
5027
: 1
=2.7 : 1
Total Debt ratio
(TDR)
Total Liabilities
Total Asset
x 100%
=
6464
17545
x 100%
=37%
Total Liabilities
Total Asset
x 100%
=
7770
18594
x 100%
=42%
Inventory Turnover
ratio (ITR)
365 days ÷
Cost Of Good Sold
Average Inventory
=365 days ÷
14279
3353
=85.7 days
365 days ÷
Cost Of Good Sold
Average Inventory
=365 days ÷
15353
3715.5
=88.3 days
Debtor Turnover
ratio (DTR)
365 days ÷
Credit Sales
Average Debtors
=365 days ÷
12656 .5
3409.5
=98.3 days
365 days ÷
Credit Sales
Average Debtors
=365 days ÷
13899.5
3607
=94.7 days
Interest Coverage
Ratio (ICR)
Interest Expense + Net Profit
Interest Expense
=
23+2472
23
=108.5 times
Interest Expense + Net Profit
Interest Expense
=
38+2693
38
=71.9 times
*Assume credit sales to be 50% of Net sales.
8. 8| F N B E 0 4 1 4 | B a s i c A c c o u n t i n g | F i n a n c i a l R a t i o A n a l y s i s
FINANCIAL STABILIT RATIOS INTERPRETATION
Working Capital (WCR)
During the 2013-2014 period, the business Working Capital (WCR) has decreased from 3.4 : 1 to
2.7 : 1. This mean the Nike’s company ability to pay its current liabilities is getting worse. In
additional, it still satisfied the minimum requirement of 2 : 1.
Total Debt (TDR)
During the 2013-2014 period, the business Total Debt (TDR) has increased from 37% to 42%.
This means the Nike’s company total debt has increased. In additional, the business do not
exceed the maximum limit of 50%.
Inventory Turnover (ITR)
During the 2013-2014 period, the business Inventory Turnover (ITR) has increased from 85.7
days to 88.3 days. This mean the Nike’s Company is getting slower at selling their products.
Debtor Turnover (DTR)
During the 2013-2014 period, the business Debtor Turnover (DTR) has decreased from 98.3
days to 94.7 days. This mean the Nike’s company is getting faster at collecting its debt.
Interest Coverage (ICR)
During the 2013-2014 period, the business Interest Coverage (ICR) has decreased from 108.5
times to 71.9 times. This means the Nike’s company ability to pay the interest is getting worse.
In additional, it satisfied the minimum requirement of 5 times.
9. 9| F N B E 0 4 1 4 | B a s i c A c c o u n t i n g | F i n a n c i a l R a t i o A n a l y s i s
PRICE/EARNINGS RATIOS
Price / earnings ratios:
=
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑠ℎ𝑎𝑟𝑒 𝑝𝑟𝑖𝑐𝑒
𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒
=
93.71
3.46
= 27.08
INTERPRETATION:
The price / earnings ratios of Nike as of 29 May 2014 is 28.5 years. This means investors who
bought share of Nike would have to wait 28.5 years in order to retain their investments. The
price / earnings ratios is also higher than what a conservative investor would pay, which is higher
than in 15 years.
10. 10| F N B E 0 4 1 4 | B a s i c A c c o u n t i n g | F i n a n c i a l R a t i o A n a l y s i s
INVESTMENT RECOMMENDATION
For our recommendation through the analysis, NIKE would not be a company worth to
invest on.
From the profitability ratio, the return of equity has increased 23.04% to 24.59% which
mean they are getting more return from its capital. NIKE’s Gross Profit Margin also showed that
the company is getting better in Cost of Goods Sold. Other than that, NIKE Company’s Selling
Expenses Ratio and General Expenses Ratio showed that the company was getting worst at
controlling it. For Net Profit Margin, it’s showed that NIKE Company was maintaining their
expenses.
As for stability ratio, the working capital of NIKE Company has decreased its mean the
ability for them to pay current liabilities is getting worst, but it’s still satisfied the minimum
requirement of 2:1. For Total Debt, although it’s has increased but it still does not exceed the
maximum limit of 50%. In additional, NIKE Company are getting slower at selling their
products as shown in the Inventory Turnover. The NIKE Company also getting faster at
collecting its debt as shown in the Debtor Turnover. Last, the NIKE Company’s Interest
Coverage has decreased. This mean the ability of them to pay the interest is getting worst and it
satisfied the minimum requirement of 5 times.
The price per earning of NIKE is higher than what a conservative investor would pay
which is higher than 15 years. The investor can only get their investment back after 27.08 years.
As a conclusion, even though NIKE’s net profit is getting better and they are earning
more. But the Price/Earnings ratio make us think that NIKE would not be a company worth
investing on if you wanted to earn money quickly.
11. 11| F N B E 0 4 1 4 | B a s i c A c c o u n t i n g | F i n a n c i a l R a t i o A n a l y s i s
APPENDIX
Income statement of Nike for 2011 until 2014
Annual Income Statement (values in 000’s) Get Quarterly Data
12. 12| F N B E 0 4 1 4 | B a s i c A c c o u n t i n g | F i n a n c i a l R a t i o A n a l y s i s
Balance sheet of Nike for 2011until 2014
13. 13| F N B E 0 4 1 4 | B a s i c A c c o u n t i n g | F i n a n c i a l R a t i o A n a l y s i s
14. 14| F N B E 0 4 1 4 | B a s i c A c c o u n t i n g | F i n a n c i a l R a t i o A n a l y s i s
Cash flow statement of Nike for 2011 until 2014
15. 15| F N B E 0 4 1 4 | B a s i c A c c o u n t i n g | F i n a n c i a l R a t i o A n a l y s i s
Nike’s current share price.
16. 16| F N B E 0 4 1 4 | B a s i c A c c o u n t i n g | F i n a n c i a l R a t i o A n a l y s i s
REFERENCES
1. NKE Company Financials. (2015, January 14). Retrieved from
http://www.nasdaq.com/symbol/nke/financials?query=ratios
2. Nike, Inc. (NKE). (2015, January 14). Retrieved from
https://finance.yahoo.com/q/is?s=NKE Income Statement&annual
3. Wiley, J. (2000) Accounting Standard: Statements of Financial Accounting Concepts.
N.Y.
4. Jones, M. (2006) Financial Accounting. Chichester, England.
5. Walter, T.H. & Charles, T.H. (2001) Financial Accounting. Upper Saddle River, N.J.