case#259581935-Finance.docx

case#259581935-Finance.docx - Running Head COMPANY ANALYSIS...

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Running Head: COMPANY ANALYSIS 1 Company Analysis: Nike Inc Name Date
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COMPANY ANALYSIS 2 About the company The paper is commissioned to perform financial analysis of a US based multinational, Nike Inc. Established in the year 1964 as Blue Ribbon Inc, Nike Inc. is engaged in designing, manufacturing and marketing of athletic footwear, accessories and apparels. At present, with the revenue figures above $34 billion and market capitalization of $98 billion, the company is the most valuable entity in the concerned industry. Additionally, with its brand value estimated at $9 billion, Nike is also one of the most valuable brand in the world. The company operates through following operating segments, North America, Western Europe, Central & Eastern Europe, Greater China, Japan and Emerging Markets. The company is listed on New York Stock Exchange(NYSE) under the ticker sign of ‘NKE’ and is currently trading at $53.73. (Reuters, 2017) Ratio Analysis Even though the financial performance of the company is disclosed in all the three major financial statements, however, for a non-amateur investor, it is imperative that these financial figures are standardized and real financial health is analyzed. In this case, financial ratios are the most useful tools to analyze the financial figures of the company in a standardized format. Below discussed are the financial ratios of Nike Inc for the period 2016 and 2017 using performance segments of liquidity, profitability, solvency and efficiency. -Liquidity Analysis a)Current Ratio: Current Assets/ Current Liabilities 2016 2017 Current Assets 15025 16061
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COMPANY ANALYSIS 3 Current Liabilities 5358 5474 Current Ratio 2.80 2.93 (Nike, 2017) b)Quick Ratio: Cash+ Receivables/Current Liabilities 2016 2017 Cash 5457 6179 Accounts Receivable 3241 3677 Current Liabilities 7789 8641 Quick Ratio 1.12 1.14 (Nike, 2017) Liquidity ratios assist in gauging the working capital position of the entity and its ability to meet short-term obligations as and when it becomes due. Based on the above calculations, we can see that during 2017, the current ratio of the company surged from 2.80 to 2.93 courtesy 6.90% increase in the current assets while current liabilities increased by 2.16%. We even assessed the liquidity position using the staunch measure of quick ratio and found the similar trend with the multiple increasing from 1.12 to 1.14 on account of higher percentage increase in cash and account receivable compared to increase in the current liabilities. This confirms that Nike is having strong liquidity roots and is quite capable to meet its short-term obligations.
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