Nike Inc Finance Analysis
As such the objective of the research paper is to provide a company assessment of Nike, Inc. In this respect the paper provides a brief background insight into the multinational corporation as well as an insight into the business entity in the introductory section. In addition it is also imperative to highlight that the research also puts into focus the current financial health associated with the business entity. The reason for assessing the financial health associated with Nike, Inc. is to determine whether or not it would be viable to invest in the company’s stock and bond in the next five to ten years. According to Success Story (2018) the firm’s headquarters are located in Beaverton in Portland and is the largest firm that supplies athletic shoes and related accessories.
It is also worth noting that as early as the year 2012 the conglomerate had made revenue that was more than USD twenty four billion. In addition the firm also currently employs more than forty thousand members of staff both directly and indirectly (Success Story, 2018). The company’s growth is evident following the fact that its brand is valued at more than twenty nine billion dollars. As such investors have already developed interest into the billion dollar empire and therefore a company analysis is crucial for them to determine whether or not they are interested in becoming shareholders in the corporation. In addition a firm’s mission statement as well as its values plays a major role in determining its financial health.
In this regard Carroll (2017) argues that the firm’s mission statement is “to bring inspiration and innovation to every athlete in the world. ” Nevertheless one of the founder’s mantra is that, “if you have a body, you are an athlete. ” It therefore means that the firm already targets all individuals regardless of the dynamics of the markets. In addition some of the firm’s pertinent values include increased performance, increasing the levels of authenticity as well as improve on the innovation and sustenance of its products (Carroll, 2017). According to Investing. com (2018) Nike’s performance in the last three months following August 2018 are promising to investors. For instance there was a ten percent increase in its revenue to about ten billion dollars, with the net income increasing by fifteen percent to exceed one billion dollars.
Its market penetration in the large part of China by about 24% is also a manifestation of the current firm’s financial health. Therefore an insight into Nike’s performance with emphasis on its current financial health shows that progress in that the firm is already poised for success in the coming years. A comparative assessment of Nike to other companies within the same industry also creates an enabling environment for determining the firm’s financial health as well as its trend in the last few years. In addition it is also essential to highlight that Nike, Inc. current ratio runs between 1 and 3 which means that the company is healthy from a financial perspective. In addition a firm with a high current ratio boosts the investor’s as well as the creditors’ confidence that the corporation is able to pay back both short term and long term based obligations to the relevant stakeholders.
However Gurufocus (2018) implores that business entities with a ratio that is below one are unable to meet their mandated obligations and thus thwart potential investors from engaging with the business entity. is already a market leader in its industry. Figure 2. An Illustration of Nike, Inc. as a Market Leader in Footwear as Compared to other Companies (Forbes, 2015) Financial Ratios associated with Nike, Inc. It is worth noting that the ratio between debt and equity concerning Nike, Inc. currently stands at 2. This figure was arrived at following the division between the corporation’s current assets by its current liabilities. Strengths and Weaknesses facing Nike, Inc. Nike’s comparative assessment to other companies inherently depends on assessing its strengths and weaknesses. In this context Kissinger (2017) implores that one of the primary factors contributing to the company’s growth is the image associated with its brand.
In addition increased innovation from competitors is a challenge as the company is coerced into innovating or remains obsolete in the production of footwear. The economic cycles associated with high prices of Nike’s products in the emerging markets are also subject to consideration as they inhibit the firm’s optimum growth. Nevertheless the firm’s is a market leader especially in North America and indeed has a competitive edge with regard to its competitors. However there is minimal pressure into coercing the firm to reduce its prices following the rise in the competition from the other industries. Conclusion The research paper shows a comprehensive insight into Nike, Inc. com/stocks/competition. php?code=NKE Forbes. Earnings Review: Nike Continues Its Strong Run.
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