This website uses cookies to ensure you have the best experience. Learn more

Nike Ratio Analysis

1624 words - 7 pages

Stock Analysis- NIKE (NKE)
Nike, Inc. is a company focus on design, development, worldwide marketing and sale of a wide range of athletic footwear, apparel, equipment, and accessory products. It sells its products through NIKE-owned retails stores and internet websites (direct to consumers), and through independent distributors and licensees, such as footwear stores, athletic specialty stores and department stores in nearly 200 countries around the world. The company’s target consumers are men, women and kids. It lays considerable emphasis on innovation and high quality construction in footwear products. Running, training, basketball, soccer, sport-inspired casual shoes, and kids’ ...view middle of the document...

53 times with its current assets, which indicates a good short-term financial strength. ADIDAS is slightly lower at 2.07. Focusing on its main competitor ADIDAS, NIKE’s higher liquidity may mean that it leaves its assets idle and not using it to its full potential.
Current ratio 0.86
Besides, the quick ratio of NIKE is 2.31, which highlights a similar movement in liquidity. This means that with the exclusion of its most illiquid asset in the form of inventory, Nike is still able to cover its current liabilities. In comparison with its competitor ADIDAS, whose quick ratio is only 0.83, NIKE is more liquid.
Asset management ratios measure how efficiently NIKE is using its investment in current and fixed assets. The inventory turnover ratio of NIKE is 2.97, a little bit lower than its competitor ADIDAS, whose ratio is 3.01. This means that NIKE turned over its entire inventory 2.97 times. As long as NIKE is not running out of stock and thereby foregoing sales, the higher this ratio is the more efficiently inventory is being managed. NIKE’s lower inventory turnover ratio may be result from its higher cost of goods sold, since it spent more money on innovation and high quality construction in footwear products.
Inventory turnover 6.98
Days sales outstanding measures how long between sales and collection. Days sales outstanding of NIKE is 30.87, shorter than it of ADIDAS, this is 40.37. This shows that it takes NIKE approximately 30.87 days to receive its cash after making a sale, while ADIDAS takes 9.5 days more to receive its cash after making a sale. It is a common sense that cash plays a significant role in running a business, the quicker NIKE collect outstanding receivables, the better. Since by quickly turning sales into cash, NIKE has the chance to reinvest with the cash and make more sales, which turn out to be a great advantage to NIKE.
Fixed asset turnover ratio measures how efficiently NIKE uses its fixed assets, such as plant and equipment, to generate sales. The figure for NIKE is 10.65%, compared to ADIDAS of 13.81%, showing that NIKE does not uses its assets to generate sales better than ADIDAS, possibly because NIKE did not use its fixed asset efficiently. Besides, NIKE’s total asset turnover ratio is 1.57%, while ADIDAS’s ratio is 1.24%. NIKE uses its total assets to generate sales better than ADIDAS.
Debt Ratio measures the percentage of funds provided by creditors. NIKE’s debt-to-asset ratio is 5.35, shows that Nike uses more debt in its financing and is therefore highly leveraged. ADIDAS is much more leveraged with the capital structures that weigh more on the debt side with a figure of 12.76.
Debt to equity 0.81
Times-interest-earned ratio is used to determine NIKE’s ability to pay interest on outstanding debt. NIKE’s ratio of 40.27 means that the company is making 40.27 times its interest payment expense. Therefore, NIKE is considered to have enough capital to pay off...

Other Papers Like Nike Ratio Analysis

Finance Paper

1324 words - 6 pages Financial Management Essay Benjamin Gray University of Maryland University College 7/31/16 Executive Summary The function of this essay is to examine why ratio and financial statement analysis are useful to any corporations. The ratio analysis is a useful tool for managers and investors that would like to evaluate the company’s financial health. By using this analysis companies are

Business Management Essay

2786 words - 12 pages timetables Design remedial and preventive programs  (Stockdale & Crosby, 2004) Ethical Analysis In this case we are talking about the company doing the right thing that it is ethically responsible. Ethics can be defined as the code of moral principles and values that help to oversee the behaviors of the employees or teams with respect to what is right and what is not. To be ethically responsible, Nike decision makers need to act with equity

Nike Case Study

2810 words - 12 pages included the following components: • Develop a line of mid-priced athletic footwear • Push the apparel line • Long-term growth target of 8 – 10% • Earnings growth target of 15% • Tighten control of expenses In this analysis, we will focus on the cost of capital for Nike, Inc. and its significance on company sustainability and future investors, such as NorthPoint. We will examine the calculation of Weighted

Under Armour

4243 words - 17 pages 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

Solution to Nike Inc Case Study

2484 words - 10 pages Executive summary In this report we focus on Nike's Inc. Cost of Capital and its financial importance for the company and future investors. The management of Nike Inc. addresses issues both on top-line growth and operating performance. The company's cost of capital is a critical element in such decisions and it is important to estimate precisely the weighted average cost of capital (WACC). In our analysis, we examine why WACC is important

Nike Case

2442 words - 10 pages Executive summary In this report we focus on Nike's Inc. Cost of Capital and its financial importance for the company and future investors. The management of Nike Inc. addresses issues both on top-line growth and operating performance. The company's cost of capital is a critical element in such decisions and it is important to estimate precisely the weighted average cost of capital (WACC). In our analysis, we examine why WACC is important

Business Analysis

992 words - 4 pages equity (10.36%). In solving for the percentage of debt I simply subtracted my percentage of equity from 100. Lastly in figuring the tax shield, I used the rate of 38%, which was obtained by adding state taxes of 3 percent to the U.S. statutory rate from Exhibit 5. 2. If you do not agree with Cohen’s analysis, calculate your own WACC for Nike and be prepared to justify your assumptions. This is the formula I used in calculating Nike’s WACC


6388 words - 26 pages 10 years faster than main competitor Nike to reach (Davis, 2014 . So far in 2014 Under Armour is able to outperform its competitors with a 23% gain year-to-date, better visible through the chart. The SWOT analysis for Under Armour gives a clear in-depth visual of where the company is currently standing and what environment it is in. Under Armour’s internal factors that consist of strengths and weaknesses, and external factors, which


1956 words - 8 pages -Wholesale with premium perfect athletic apparel made with high tech fabrics ( ex: nike, adidas, etc. ) -Expansion Debt to equity ratio =have decrease 53% from year 2009 to 2013 shows that they are in lower risk since lululemon have less claim on the company assets. If they have higher debt to equity ratio means they are more aggressive in financing its growth with debt but greater risk for financial distress if earning do not exceed the the cost

New Balance Athletic Shoe Inc

2587 words - 11 pages begin to ask questions about the company’s response. In order to secure its assets, the Davises must quickly determine how to tackle the situation and capture resulting growth opportunities, if any. External Analysis New Balance operates in the athletic footwear industry. Unlike its main competitors – Nike, Reebok and Adidas – it does most of its business in the U.S. market. Americans are accounting for about 50% of the spending worldwide

A Summary And Technical Analysis Of The Under Armour, Inc

1261 words - 6 pages a recommendation to buy stock at the estimated price target of Keywords: stock analysis, return on equity, projected future growth rate, required rate of return, intrinsic value   A Summary and Technical Analysis of the Under Armour, Inc. (UA) Stock on the New York Stock Exchange Under Armour, Inc. (UA) was established in 1996 by Kevin Plank, a former captain for the University of Maryland football team. His concept for a better T-shirt

Related Essays

Nike's Financial Analysis

4382 words - 18 pages %. Skechers USA, another competitor, paid no dividends. The dividend yield of S&P 500 was 2.06%, while the dividend yield in the footwear industry was 1.44%. The payout ratio for the footwear industry was 20.37%, and the S&P payout ratio was 28.23% [ (Stock Analysis On Net, 2012) ] Although, S&P 500 performed better than Nike in regards to dividend yield and payout ratio, one has to take into account that in footwear industry

Macroeconomics Essay

2178 words - 9 pages Financial Accounting Acct-2010 Financial Analysis of Nike After reviewing Nike’s 10k, it can be assumed that Nike is in an optimal financial condition relative to that of their industry. Nike exceeds the industry in liquidity, solvency, and profitability. The bottom line is that Nike’s managerial decisions have put the company ahead of the industry and on the track to long term sustainability and growth. Risks and Strengths: Nike has a

Richard .Vs Richmond Essay

1228 words - 5 pages calculation of Interest Coverage impossible. The first thing that is immediately evident upon analysis of both companies’ is that, while both companies have a similar amount of liquidity, Nike does a better job of managing inventory. Nike has a quick ratio of 1.93 -- higher that both of Under Armour‘s. Further investigation shows that Nike turns over its equity approximately every 87 days, while in 2007 Under Armour turned over its equity every

Nike Cost Of Capital Essay

3140 words - 13 pages forecast to come to a clearer conclusion. Her forecast showed that, at a discount rate of 12%, Nike was overvalued at its current share price of $42.09 (Exhibit 2). However, she had done a quick sensitivity analysis that revealed Nike was undervalued at discount rates below 11.17%. Because she was about to go into a meeting, she asked her new assistant, Joanna Cohen, to estimate Nike’s cost of capital. Cohen immediately gathered all the data she