...A Financial Ratio Quarterly Trend Analysis of Nike, Inc. Stock symbol: NKE Listed on the New York Stock Exchange Prepared for: Dr. Edward Lawrence Department of Finance Florida International University In partial fulfillment of the requirements of the course: FIN 6406 By: Introduction This financial ratio quarterly trend analysis was composed for Nike International. The U.S –based company was started in 1964 with $500, with its main office being the trunk of a green Plymouth Valiant1. Originally started by Bill Bowerman, a nationally respected track and field coach at the University of Oregon, and Phil Knight, an accountant, who also happened to be a talented middle-distance runner from Portland2. Knight enrolled at Oregon in the fall of 1955 and competed for Bowerman’s track program thus creating the platform for Blue Ribbon Sports3, which is now known worldwide as Nike. Nike currently operates its three main product lines - footwear, apparel and equipment – in 46 countries by approximately 600 contract factories that employ more than 800,000 workers around the world4. Nike International’s stock is publicly traded on the New York Stock Exchange (NYSE) under the symbol “NKE”, which we will use to reference the company throughout this report. Our team chose to analyze NKE for the following reasons: • Knowing that the company started very small and grew to what seems a limitless boundary seemed intriguing to us and promoted a desire to understand...
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...Nike’s Financial Analysis Antonio Sanguinetti Dr. Muleka Kikwebati Strayer University Financial Management March 10, 2012 Table of Contents Abstract 3 History 4 Scope of international operations. 5 Capital structure. 5 Ratios. 6 Dividends 7 Recent stock performance. 8-9 SWOT Analysis 10-12 Final Thoughts 13-14 References 15 Appendixes 16 Abstract The purpose of this paper is to provide investors with comprehensive information on Nike, its financial health and activities, its strength and weaknesses, and whether Nike creates value to its shareholders. This paper will analyze Nike's capital structure, scope of international operations, recent stock performance, and dividend policy. Examine how Nike's international operations are conducted, its criticisms and strengths. Nike's debt ratios, dividend payout ratios, dividend yield, and interest coverage ratios over the previous 5 years will be discussed and compared with industry benchmarks. Develop a SWOT analysis and shared finals thought on Nike’s future. Nike is a company that has thoroughly embedded itself into the psyche of people around the world. It's a company that started with humble origins from selling footwear in the basement to becoming the behemoth in the athletic industry. Bill Bowerman, University of Oregon track & field coach, and Phil Knight, middle-distance runner under Bowerman co-founded Nike. Nike was first established as Blue Ribbon Sports in 1964 as a partnership and the...
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...Nike, Inc. Accounting Analysis Brian Knoske Harding University Abstract Nike, Inc. is one of the most successful companies in the world. They consistently post high revenue numbers, which can be attributed to their excellent worldwide view. They are the world leader in footwear sales, which was the product that the company was originally built on. When Phil Knight and Bill Bowerman originally formed a company, they only wanted to provide athletes with a better shoe. Their success keeps their return on stock consistently up, which is a difficult thing to come by in these tough economic times. If Nike wishes to remain a successful company, they will have to appropriately deal with their accusations of poor working conditions for their foreign warehouses. Description of Company Nike, Inc. is a company that specializes in designing and selling athletic footwear and apparel (Nike, inc., 2011). Their products are of high quality and reasonable price, leading them to be highly sought after by consumers. This has led Nike, Inc. to become the number one athletic footwear supplier in the United States (Nike, inc., 2011). Nike, Inc. is also one of the world leaders in selling athletic uniforms, apparel, and casual clothing. In addition to designing and selling their products, Nike also operates NIKETOWN stores, Nike Factory Outlets, Nike Women’s Shops, and an online website (Nike, inc., 2011). Nike’s products are sold in 690 of these stores worldwide as well as at an...
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...COMPANY SYNOPSIS NIKE, Inc. NIKE is a multinational recognized company that is coined as one of the largest sellers of athletics footwear and apparel with revenues grossing $30,601 million. (Marketline, 2016) Its management team consists of an executive board of directors, corporate governance team and a board of directors. Its Board of Directors Philip H. Knight, is one of its co-founders. Knight and his partner Bill Bowerman founded at that time Blue Ribbon Sports in 1964 and changed its name officially to NIKE, Inc. in 1971. NIKE is known for its strong brands like NIKE, Jordan, Converse, and Hurley and has partnered with many high profile athletes such as Michael Jordan, Kobe Bryant, and LeBron James to test and market its strong portfolio of brands. NIKE also incorporates a team of coaches, athletes, trainers, equipment managers, orthopedists, podiatrists, and a slewful of other experts to ensure they’re focused primarily on R&D activities that propel their brand to the forefront. (MarketLine, 2016) This focus and their alignment with external forces is vital due the intense competition and a growing number of counterfeit products. Another approach of NIKE that has deemed lucrative in their market is their Multi-Channel Approach. NIKE sells its products through various channels such as retailing online and in-store. At the end of 2015 NIKE’s portfolio consisted of 592 retail stores, which includes 512 factory stores and 73 online stores internationally. In addition...
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...Nike: A Look Inside | June 22 2010 | By Bobby Bedsole, Matt Currie, & Brady Stoker | [Type the document subtitle] | Table of Contents Executive Summery External Analysis 1) Industry/Competition- Five Forces Current Rivalry opportunities/ Threats Potential Entrant Opportunities/ Threats Bargaining Power of Buyer Opportunities/ Threats Bargaining Power of Supplier Opportunities/ threats Substitute Products Opportunities/ Threats 2) General External Environment General Economic Opportunities/ Threats Demographic Opportunities/ Threats Sociocultural Opportunities/ Threats Political-Legal Opportunities/ Threats Technological Opportunities/ Threats Internal Analysis 1) Capabilities Assessment 2) Assessing the Primary Activities in the Value Chain a) Inbound and outbound Logistics b) Marketing c) Production Support Activities in the Value Chain a) Technological Development b) Human Relations Management c) Firm Infrastructure 3) Internal Audit of Functional Areas a) Management b) Information Systems c) Research and Development Financial Analysis- Conclusion Executive Summary Nikes Mission Statement: Our goal is to carry on his legacy of innovative thinking, whether to develop products that help athletes of every level of ability reach their potential, or to create business opportunities that set Nike apart from the competition and provide value for our shareholders...
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...its initial base layer clothing meant to be worn “under armour.” Under Armour now produces clothing, footwear, and accessories for baseball, golf, cross-training, military/tactical use, hunting, and assorted other athletic or outdoor disciplines. Dedicated displays at large retailers such as Dick’s Sporting Goods and Sports Authority and Under Armour retail outlets are helping to grow the brand and its dedicated customer base. Under Armour revolutionized the world of athletic wear and created products that are considered a necessity to increase comfort and performance during athletic training. With this massive success comes a massive price -- Under Armour has drawn the attention of athletic apparel and footwear leaders, most notably Nike. With Nike’s sheer size and resources, it is truly a case of David vs. Goliath. Under Armour does not own any fabric or process patents at the moment, so it is...
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...Financial analysis for NIKE. Calculation: These financial measures for the fiscal years ending May 31, 2007 and 2006. • Working capital: Working capital = Current assets – current liabilities |Working Capital | | | | |2007 |2006 | | | | | |Current Assets |8,076.50 |7,346.00 | |Current Liablities |2,584.00 |2,612.40 | |Working Capital |5,492.50 |4,733.60 | • Current Ratio: CR % = Current Assets / Current Liabilities * 100 |CR % | | | | |2007 |2006 | | ...
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...CompanyAnalysis Group 14_Jonathan Hayes_Clint Halim Jonathan Hayes Fin201*02 Fundamentals of Financial Mgt. 12/17/15 Nike Inc. NKE $126.30 Dec. 13th Close 2. Nike Incorporated is the worlds largest producer of exclusively branded footwear, clothing and sports apparel such as cleats, shoes, socks, shirts, pants, etcetera. The logo for Nike was created back in 1971 around the start of the business. By the late 70’s Nike was evaluated at 210 million dollars. As of today Nike has surpassed revenues of over 30.6 billion dollars and continues to grow. Approximately 77 percent of Nike’s sales in the past year has been wholesale, with 23 percent accounting for direct selling to customers through the Nike webpage, as well as affiliate outlets. Around 64% of Nikes revenues are generated from sales of shoes. As you will see in the analysis Nike is steadily growing in the high single digit growth in revenues and earnings per share. Nike Inc. has 6 notable regions of distribution: North America (48% 2015 revenues), Western Europe (20%), Central & Eastern Europe (5%), Greater China (11%), Japan (3%), and emerging markets (14%). As far as retail distribution locations are concerned, Nike has 33 factory overstock outlets around the United States and 73 abroad employing 185 different operations factory stores in the United States, and 512 internationally. American labor by number of factory outlets account for 26.5% of the total production of goods. In the five...
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...Profitability Return on Equity | 2012 | Under Armour | 15.8% | Nike, Inc. | 21.4% | The return on assets ratio measures how effectively a company can earn a return on its investment in assets. In other words, ROA shows how efficiently a company can covert the money used to purchase assets into net income or profits. Based on Nike, Inc.’s ROE of 21.4%, it can be concluded that Nike, Inc. could be more efficient in utilizing its equity base and may have a better return to investors than Under Armour, whose ROE is 15.8%. Return on Assets | 2012 | Under Armour | 11.1% | Nike, Inc. | 14.4% | The return on equity ratio or ROE is a profitability ratio that measures the ability of a firm to generate profits from its shareholders investments in the company. In other words, the return on equity ratio shows how much profit each dollar of common stockholders' equity generates. Based on Nike, Inc.’s ROA of 14.4%, it can be determined that Nike, Inc. is may be more efficient in managing the utilization of its asset base versus Under Armour, whose ROA is 11.1%. The higher the ratio the better profit gain the company produces. Financial Leverage Percentage | 2012 | Under Armour | 4.7% | Nike, Inc. | 7% | The financial leverage percentage measures the advantage or disadvantage that occurs when a company’s return on equity differs from its return on assets. Under Armour’s financial leverage ratio (4.7%) is lower because it utilizes less debt in its capital structure...
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...Table of Contents Written Report Executive Summary…….............................................................................. 2 Company Profile………………………………………………………..…..3 Industry Analysis…………………………………………………………...4 SWOT Analysis………………………………………………………….....8 Valuation…………………………………………………………………..12 Conclusion……………………………………………………………..…..13 Historical Ratio Analysis Valuation ratios………………………………………………………........17 Dividends………………………………………………………………….17 Growth rates……………………………………………………………….18 Financial strength………………………………………………………….18 Profitability ratios………………………………………………………….19 Management effectiveness…………………………………………….......19 Efficiency………………………………………………………………….19 Valuation Tables Pro Forma Income Statement……………………………………………..21 Pro Forma Balance Sheet…………………………………………………23 Free Cash Flow……………………………………………….…………...25 Free cash flow valuation summary……………………………..……...….26 WACC calculation………………………………………………………...27 Sensitivity analysis………………………………………………………...27 Graphs/ Plots Net income (loss) by year……………………………………………….…28 Free cash flow by year……………………………………………………..28 Written Report Executive Summary Executive Summary Introduction of the Firm Under Armour (UA) was incorporated on July 1, 1996; producing and distributing performance apparel and footwear for athletes of all ages. The brand engineered a fabric that enhances performance and comfort through its “moisture wicking” fabrications that helps athlete’s performance no matter the weather...
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...JOHN MOLSON SCHOOL OF BUSINESS | CASE ANALYSIS: NIKE INC. – COST OF CAPITAL | FOR PROF. EDWARD WONG | | ARUN KUMAR DURAIRAJ – 27416008 NIDISH PC – 27254423 VIPUL PARTI – 27246307 | 12/3/2015 | | Evaluation of Cohen’s Report and Calculation of WACC We do not agree with Cohen’s report about the cost of capital because of the following reasons. * Capital Structure (% equity vs % debt): In calculating the capital structure of Nike Inc., Johanna Cohen has calculated the percentage of equity from the book value given in the balance sheet. However this is not a correct index of the current market value of the firm. Instead, she should use the most recent value given by the recent market price of the share. Market Value of Equity = Current outstanding shares*Current share price = 271.5 million * 42.09 = 11427.44 million Debt: Current Portion of LT Debt = $5.4 million Notes Payable = $855.3 million Long Term Debt = $435.9 million Total Debt = $1296.6 million Proportion of Debt = 1296.6/(1296.6+11427.44)...
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...13/3/2013 Nike, Inc. Cost of Capital 1 Discussion Questions • What is the WACC and why is it important to estimate a firm’s cost of capital? What does it represent? Is the WACC set by investors or by managers? • Do you agree with Joanna Cohen’s WACC calculation? Why or why not? If you do not agree with Cohen’s analysis, calculate your own WACC for Nike and be prepared to justify your assumptions. What mistakes did Joanna Cohen make in her analysis? Which method is best for calculating the cost of equity? • Calculate the costs of equity using CAPM, the dividend discount model, and the earnings capitalization ratio. What are the advantages and disadvantages of each method? • What should Kimi Ford recommend regarding an investment in Nike? 2 1 13/3/2013 Background • Kimi Ford needs to decide on investing in Nike, Inc. • To do so, Kimi Ford needs to derive fair value of Nike stock to compare with current market share price • Kimi Ford tasked Cohen to compute Nike’s Cost of Capital 3 Scope 1. Review of Cohen’s Analysis 2. Nike’s Cost of Equity 3. Valuation Methods and Selection a. Market Approach b. Income Approach 4. Choice of Valuation Method 5. Risk Assessment a. Sensitivity Analysis b. Scenario Analysis 6. Investment Recommendation 4 2 13/3/2013 Cohen’s Analysis Issues Opinion Single or Multiple Cost of Capital Appropriate to use Single Cost of Capital as business segments in Nike subject to same...
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...Institute of Management, Christ University Kengeri Campus, Bangalore. Review On Cluster Analysis Submitted for the partial fulfillment of process related to Continuous Internal Assessment 1 In Marketing Analytics [MBA - III Trimester (MBA 322)] Submitted By P.Akhilesh 1420419 Cluster analysis? The Cluster Analysis is an explorative analysis that tries to identify structures within the data. Cluster analysis is also called segmentation analysis .It is used to identify groups of cases if the alignment is not previously known. Because it is explorative it does make any distinction between dependent and independent variables. The different cluster analysis methods that SPSS offers can handle binary, nominal, ordinal, and scale (interval or ratio) data. Different types of cluster analysis include: * Hierarchical Analysis * Two step Cluster * K-means cluster From the given data set: * We have both continuous and categorical variables * Continuous variables include: Attitude towards Nike, Awareness towards Nike, Preference for Nike Loyalty for Nike and purchase intention for Nike * Categorical variables: Sex, Hierarchical Cluster Analysis: Ward method: * Here it is clearly mentioned that from cluster one 15 respondents are available , from cluster two 15 respondents are available and from cluster three 10 respondents are available * We have 5 missing respondents who had not respondent or the...
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...Case Study: Nike, Inc.: Cost of Capital BUSFIN 4214 Written By: Joe Nau Nau.33@osu.edu Section: 32347 Cost of Capital NorthPoint Group’s strategy consists of identifying and investing in undervalued public companies. Joanna Cohen, an assistant to a portfolio manager at NorthPoint, is asked to help evaluate whether Nike Inc. is undervalued. Analysis by the portfolio manager shows that when Nike’s cash flows are discounted at 12% their shares are overpriced, however, when discounted at rates below 11.17% the firm is undervalued. Cohen is tasked to further analyze Nike’s cost of capital to accurately estimate what rate their cash flows should be discounted back at. Joanna Cohen’s WACC Calculations Cohen decides to use a single cost of capital rather than multiple costs of capital. This is accurate as Nike operates primarily in the same business segments and each segment assumes similar risks. To find Nike’s Weighted Average Cost of Capital (WACC), she must first find the capital structure of the firm. Cohen incorrectly uses the book value of equity, rather than the market value. Additionally, she uses the book value of debt, however this is acceptable because the market values are not provided in the case. With Nike’s capital structure in hand, Cohen begins calculate the cost of capital for debt and equity. To calculate the cost of debt, Cohen uses historical interest expenses as a proxy, however this is not a forward looking estimation and using the materials provided...
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...Consulting Group Subject: Financial Analysis Dear Herbert: Thanks to the firm giving our company the opportunity to review Adidas financial statements and make this analysis report and presented to CEO attention. Using 2011 annual report our consulting team analyzed data provided by accounting department and calculated the following ratios. As Current Ratio we have 1.53 : 1. For Acid-Test (Quick) Ratio we have .73 : 1. As Receivable Turnover we have 7.9 times. As Inventory Turnover we have 3.04 times. The previous ratios relates to Liquidity Ratios. As we mentioned above Current Ratio is 1.53, which is good but should be better if this ratio could be 2:1, which indicates company has good solvency. As we both know a healthy quick ratio should be between 0.5 and 1, where company is good so far with 0.73. Receivable turnover ratio tells us that company collects 1.5 times in a month for its accounts receivable. Inventory turnover tells us the that company’s inventory is sold and replaced in a period of 120 days. The best way to know if the above liquidity ratios are good or not, is by comparing them with competitor’s ratios. According to our principal competitor’s annual report, which is Nike, Adidas manage almost similar ratios besides current ratio 2.9, quick ratio 1.8, and inventory turn over 4.2. By compare them we notice Adidas is experiencing some difficulties to pay off its short-term debts rather than Nike. Profitability ratios composed from Asset Turnover...
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