Financial Ratio Analysis for Nice Inc.<\/p>\n
Student\u2019s Name<\/p>\n
Institutional Affiliation<\/p>\n
Table of content <\/p>\n
Content:<\/p>\n
Page no:<\/p>\n
Introduction <\/p>\n
3<\/p>\n
SWOT Analysis <\/p>\n
3,4, 5 <\/p>\n
Income statement <\/p>\n
5, 6, 7<\/p>\n
Balance sheet <\/p>\n
7<\/p>\n
Financial Ratios and Liquidity Ratio <\/p>\n
7,8,9,10,11<\/p>\n
LONG-TERM DEBTS <\/p>\n
11, 12 <\/p>\n
Profitability Ratios <\/p>\n
12,13, 14, 15,16,17<\/p>\n
Summary <\/p>\n
17<\/p>\n
Financial Ratio Analysis for Nice Inc<\/p>\n
Introduction<\/p>\n
The Head office of Nike is situated in Beaverton, Oregon, Portland metropolitan region. Bill Bowerman and Phil Knight established this enterprise in 1964 as Blue Strip Sports (BRS). Quite a while later, in 1978, the organization changed its business name to Nike, Inc. This name comes from the Greek language; it has a place with the old Greek goddess of triumph. The organization was at first settled as a shipper of Japanese shoes. In the long run, it ventured into the leading worldwide advertiser of footwear, with a world piece of the pie of around 37%. The organization has around 22,000 retail locations throughout the US where it sells its product. The organization markets its merchandise under its brands Additionally, Nike Golf and Nike Ace.<\/p>\n
The organization has various notable auxiliaries like the Opposite and Umbro. Nike’s significant business try is the planning, improvement, and worldwide promotion of top-notch footwear, gear, clothing, and frill items. Nike is the goliath merchant of athletic footwear and athletic attire all around the globe. The organization is spread in 108 nations where it advertises its products. Self-employed entities make every one of the merchandise or items have a place with Nike, Inc. Practically all the clothing and footwear items are delivered externally to the US of America.<\/p>\n
SWOT Analysis<\/p>\n
Strengths\u00a0\u00a0<\/p>\n
Nike has numerous qualities upheld by the long history and current ubiquity of the brand. Nike’s logo stays perhaps the most transparent image available – the “swoosh” image is associated with clients to sports shoes and elite competitors like LeBron James and Serena Williams. Organization increments in openness of the brand and its status as a vendor of well-known merchandise. Nike offers shoes and leisure dresses, and pro athletics hardware. The organization has an expansive enticement for a few socioeconomics. The inventory network of the business shows that Nike works through various retail channels, enhancing the items’ course from plants to clients. In light of its maker’s choice, Nike’s minimal expense of assembling resembles its imaginative, innovative work divisions’ thoughts. At last, Nike is a global brand which broadens its compass to clients.<\/p>\n
Weaknesses\u00a0<\/p>\n
Nike has a few shortcomings that influence its presentation. The long interaction from the plan of an item to its show to clients makes the organization’s creation resolute. The delegates show that the organization might endure a while making a shoe. The firm needs help to perfectly anticipate client tastes and preferences, patterns, and weather conditions changes. These factors adversely impact Nike’s performance, unfortunate working circumstances or other infringements such as manageability and specialist assurance guidelines. Nike depends intensely on the US as an overwhelming premium market where different business sectors are not invested. The capacity of retailers to control costs, as apparent on account of Nike’s late conveyance of shoes, can bring down Nike’s benefits. Moreover, past outrages’ historical backdrop influences the brand and restricts its effort to some client gatherings.<\/p>\n
Opportunities\u00a0<\/p>\n
One of the potential open doors that Nike can invest in is to expand its global presence in leisure and proficient active apparel business sectors. Yearly worldwide games, for instance, are an excellent spot to get new agreements, publicize, and raise client mindfulness. The shift to expanding the brand’s dependence on different nations might give extra stable income channels. Besides, Nike has the strength to invest its resources into making new items like wearable gadgets, shades, gems, and merchandise. Athleisure is turning out to be generally perceived as a chic pattern; Nike might team up with originators and brands to make selective lines and restricted versions for an area of clients to appreciate. One more open door lies in the store network. Nike can coordinate a few providers, getting a sense of ownership with the quality and climate of offices.<\/p>\n
Threats\u00a0<\/p>\n
Nike faces a few dangers connected with the market, clients’ discernments, and monetary instability. Nike is a famous brand, and the chance of fakes and configuration taking among contenders is high. Copies of Nike shoes sold at lower costs can engage a few people and lower the deals of the brand. Aside from that, the opposition in the fragment of sports shoes is rising – organizations utilize aggressive publicizing efforts and battle to lay out companies with groups, competitors, and big names. Nike’s situation is a moral organization in the store network can constantly be subverted by a new fresh insight about common liberties infringement, unreasonable work rehearses, and other social emergencies. Nike operates worldwide, helpless against any cash-swapping scale change and political contentions between nations.<\/p>\n
Table 1: SWOT analysis of Nike<\/p>\n
Strengths <\/p>\n
International position<\/p>\n
Strong research and development <\/p>\n
Low manufacturing process<\/p>\n
Different retail channels <\/p>\n
Celebrity partnerships<\/p>\n
Weaknesses<\/p>\n
History of the controversies <\/p>\n
Overdependence in US market <\/p>\n
Unstable suppliers poor labor conditions <\/p>\n
Inflexible production process <\/p>\n
Opportunities <\/p>\n
Collaboration with fashion sector<\/p>\n
Suppliers integration <\/p>\n
Product innovation <\/p>\n
Global expansion <\/p>\n
Threats <\/p>\n
unstable exchange rates<\/p>\n
Further moral crisis rising rivalry<\/p>\n
Replicas <\/p>\n
Income Statement<\/p>\n
Analysis <\/p>\n
For the financial years 2007, 2008, and 2009, Nike Inc. reported increased sales revenues of $16,326, $18,627, and $19,176, respectively. The increase also translated to an increase in gross profit in the respective years. Subsequently, the operating income increased from $2,132 $2,434, and $2,455 for the three financial years. Overall, the income statement for Nike reported a positive net income for the three financial years: $1,492, $1,883, and $1,487.<\/p>\n
Balance Sheet <\/p>\n
Liquidity Ratios<\/p>\n
LIQUIDITY<\/p>\n
2009 <\/p>\n
2008 <\/p>\n
2007 <\/p>\n
–<\/p>\n
–<\/p>\n
–<\/p>\n
–<\/p>\n
Days’ Sales in Receivables<\/p>\n
56.30 <\/p>\n
55.59 <\/p>\n
56.63 <\/p>\n
Accounts Receivable Turnover<\/p>\n
6.62 <\/p>\n
6.94 <\/p>\n
6.59 <\/p>\n
A\/R Turnover in Days<\/p>\n
55.15 <\/p>\n
52.61 <\/p>\n
55.38 <\/p>\n
Nike\u2019s day-to-day sales in receivables increased from 6.63 days in 2007 to 56.30 in 2009. Also, the accounts receivable turnover increased from 6.58 to 6.62 within the same fiscal period. Accounts receivable turnover in days reduced slightly from 5.38 in 2007 to 5.15 in 2009. The liquidity position improved from 2007 to 2009, signaling good performance.<\/p>\n
Days’ Sales in Inventory<\/p>\n
81.38 <\/p>\n
86.92 <\/p>\n
84.50 <\/p>\n
Inventory Turnover<\/p>\n
4.41 <\/p>\n
4.49 <\/p>\n
4.37 <\/p>\n
Inventory Turnover in Days<\/p>\n
82.78 <\/p>\n
81.28 <\/p>\n
83.60 <\/p>\n
Nike’s day’s sales in inventory increased from 84.50 days in 2007 to 81.30 in 2009. Also, the inventory turnover increased from 4.37 to 4.41 within the same fiscal period. Inventory turnover in days reduced slightly from 83.60 in 2007 to 5.1582.78 in 2009. Overall, the liquidity position improved from 2007 to 2009, indicating good performance.<\/p>\n
Operating Cycle<\/p>\n
137.93 <\/p>\n
133.89 <\/p>\n
138.98 <\/p>\n
Working Capital<\/p>\n
6,457 <\/p>\n
5,518 <\/p>\n
5,493 <\/p>\n
Current Ratio<\/p>\n
2.97 <\/p>\n
2.66 <\/p>\n
3.13 <\/p>\n
Nike\u2019s operating cycle reduced from 138.98 in 2007 to 137.93 in 2009. Also, the working capital increased from 5,493 to 6,457 within the same fiscal period. The current ratio reduced slightly from 3.13 in 2007 to 2.87 in 2009. Overall, the liquidity position improved from 2007 to, 2009which is a suggestion of excellent performance.<\/p>\n
Acid Test<\/p>\n
1.93 <\/p>\n
1.68 <\/p>\n
2.07 <\/p>\n
Cash Ratio<\/p>\n
1.05 <\/p>\n
0.84 <\/p>\n
1.10 <\/p>\n
Sales to Working Capital<\/p>\n
3.20 <\/p>\n
3.38 <\/p>\n
3.19 <\/p>\n
Cash Flow\/Cur. Mat. of Debt & NP<\/p>\n
4.63 <\/p>\n
10.52 <\/p>\n
14.31 <\/p>\n
Nike\u2019s acid test reduced from 2.07 in 2007 to 1.93 in 2009. Also, the cash ratio reduced from 1.10 to 1.05 within the same fiscal period. Sales to working capital reduced slightly from 3.19 in 2007 to 3.20 in 2009. The liquidity position was reduced from 2007 to 2009 to improve performance.<\/p>\n
Long Term Debt <\/p>\n
LONG-TERM DEBT-PAYING ABILITY<\/p>\n
2009 <\/p>\n
2008 <\/p>\n
2007 <\/p>\n
Times Interest Earned<\/p>\n
49.55 <\/p>\n
62.50 <\/p>\n
45.26 <\/p>\n
Fixed Charge Coverage<\/p>\n
25.46 <\/p>\n
34.33 <\/p>\n
29.13 <\/p>\n
Debt Ratio<\/p>\n
34.39%<\/p>\n
37.11%<\/p>\n
34.27%<\/p>\n
Debt\/Equity<\/p>\n
52.42%<\/p>\n
59.01%<\/p>\n
52.14%<\/p>\n
Debt to Tangible Net Worth<\/p>\n
56.73%<\/p>\n
69.61%<\/p>\n
56.49%<\/p>\n
Cash Flow\/Total Debt<\/p>\n
38.10%<\/p>\n
41.93%<\/p>\n
51.29%<\/p>\n
Nike\u2019s time interest earned increased from 45.26 in 2007 to 49.5 in 2009. The fixed charge coverage was reduced from 29.13 in 2007 to 25.46 in 2009. Within the same period, the cash flow\/ total debt reduced from 51.26% to 38.10%. Overall, Nike\u2019s debts reduced from the financial year 2007 to 2009.<\/p>\n
Profitability <\/p>\n
–<\/p>\n
–<\/p>\n
–<\/p>\n
–<\/p>\n
PROFITABILITY<\/p>\n
2009 <\/p>\n
2008 <\/p>\n
2007 <\/p>\n
–<\/p>\n
–<\/p>\n
–<\/p>\n
–<\/p>\n
Net Profit Margin<\/p>\n
7.75%<\/p>\n
10.11%<\/p>\n
9.14%<\/p>\n
Total Asset Turnover<\/p>\n
1.49 <\/p>\n
1.61 <\/p>\n
1.59 <\/p>\n
Return on Assets<\/p>\n
11.57%<\/p>\n
16.28%<\/p>\n
14.51%<\/p>\n
Operating Income Margin<\/p>\n
12.80%<\/p>\n
13.07%<\/p>\n
13.06%<\/p>\n
Operating Asset Turnover<\/p>\n
1.74 <\/p>\n
1.84 <\/p>\n
1.76 <\/p>\n
Return on Operating Assets<\/p>\n
22.25%<\/p>\n
24.10%<\/p>\n
22.94%<\/p>\n
Sales to Fixed Assets<\/p>\n
10.99 <\/p>\n
11.36 <\/p>\n
10.33 <\/p>\n
Return on Investment<\/p>\n
15.89%<\/p>\n
22.22%<\/p>\n
19.86%<\/p>\n
Return on Total Equity<\/p>\n
18.00%<\/p>\n
25.36%<\/p>\n
22.41%<\/p>\n
Nike\u2019s return on equity increased from 10.33 in 2007 to 11.36 in 2008 and reduced to 10.99 in 2009. However, the return on investment reduced from 19.86 % in 2007 to 22.22% in 2009. Return on equity increased from 22.41% in 2007 to 25.36% in 2008 and reduced to 18% in 2009. Overall, Nike\u2019s profit increased between the period of 2007 to 2009.<\/p>\n
return on Common Equity<\/p>\n
18.00%<\/p>\n
25.36%<\/p>\n
22.41%<\/p>\n
Gross Profit Margin<\/p>\n
44.87%<\/p>\n
45.03%<\/p>\n
43.86%<\/p>\n
Nike\u2019s return on equity increased from 22.41% in 2007 to 25.36% in 2008 and finally reduced to 18% in 2009. However, the gross margin increased from 43.86% in 2007 to 44.87% in 2009. Overall, Nike\u2019s profit increased between the period of 2007 to 2009.<\/p>\n
INVESTOR ANALYSIS<\/p>\n
2009 <\/p>\n
2008 <\/p>\n
2007 <\/p>\n
Degree of Financial Leverage<\/p>\n
1.02 <\/p>\n
1.02 <\/p>\n
1.02 <\/p>\n
Earnings per Share<\/p>\n
3.03 <\/p>\n
3.74 <\/p>\n
2.93 <\/p>\n
Price\/Earnings Ratio<\/p>\n
18.83 <\/p>\n
18.28 <\/p>\n
19.37 <\/p>\n
Percentage of Earnings Retained<\/p>\n
68.61%<\/p>\n
78.08%<\/p>\n
76.96%<\/p>\n
Dividend Payout<\/p>\n
32.34%<\/p>\n
23.40%<\/p>\n
24.23%<\/p>\n
Dividend Yield<\/p>\n
1.72%<\/p>\n
1.28%<\/p>\n
1.25%<\/p>\n
Book Value per Share<\/p>\n
17.91 <\/p>\n
15.93 <\/p>\n
14.00 <\/p>\n
Materiality of Options<\/p>\n
7.97%<\/p>\n
6.32%<\/p>\n
8.29%<\/p>\n
Oper. Cash Flow per Share<\/p>\n
3.54 <\/p>\n
3.84 <\/p>\n
3.68 <\/p>\n
Operational. Cash Flow\/Cash Dividends<\/p>\n
3.72 <\/p>\n
4.69 <\/p>\n
5.47 <\/p>\n
Year-end Market Price<\/p>\n
57.05 <\/p>\n
68.37 <\/p>\n
56.75 <\/p>\n
Nike\u2019s cash flow\/ cash dividends reduced from 5.47 in 2007 to 3.72 in 2009. The year-end market price reduced from 56.75 in 2007 to 57.05 in 2009. Within the same period, the operating cash flow per share reduced from 3.68 to 3.54. The material of options reduced from 8.29% in 2007 to 7.97% in 2009. Within the same period, the book value per share increased from 14.00 to 17.91. The earnings per share increased from 2.93 in 2007 to 3.03 in 2009. Overall, the investor\u2019s value increased between the period of 2007 to 2009, as demonstrated by various investor ratios.<\/p>\n
The Horizons of Financial Summary <\/p>\n
Overall, looking at the financial performance of Nike for the financial period 2007, 2008, and 2009, the company presented better financial performance spanning from liquidity, profitability and debt ratios. Nike’s liquidity has increased across the period showing that the company can meet its financial obligation as and when they fall due. In terms of profitability, Nike was a very profitable company for three consecutive years 2007, 2008, and 2009. In terms of leverage ratios, debt ratios Nike demonstrated the ability to reduce as the debt ratios reduced significantly across the period. The data shows that the company can finance its operations using its equity. The reduction in the debt ratios shows that the company’s cash position is stable and can be closed to bankruptcy.<\/p>\n","protected":false},"excerpt":{"rendered":"
Financial Ratio Analysis for Nice Inc. Student\u2019s Name Institutional Affiliation Table of content Content: Page no: Introduction 3 SWOT Analysis 3,4, 5 Income statement 5, 6, 7 Balance sheet 7 Financial Ratios and Liquidity Ratio 7,8,9,10,11 LONG-TERM DEBTS 11, 12 Profitability Ratios 12,13, 14, 15,16,17 Summary 17 Financial Ratio Analysis for Nice Inc Introduction The […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[10],"class_list":["post-106756","post","type-post","status-publish","format-standard","hentry","category-research-paper-writing","tag-writing"],"_links":{"self":[{"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/posts\/106756","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/comments?post=106756"}],"version-history":[{"count":0,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/posts\/106756\/revisions"}],"wp:attachment":[{"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/media?parent=106756"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/categories?post=106756"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/tags?post=106756"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}