![REFERENCE
1. NKE Key Financial Ratios. (2015, June 1). Retrieved June 2, 2015, from
http://www.nasdaq.com/symbol/nke/financials?query=ratios
2. Jones, D. (2015, May 26). The footwear and apparel giant is set to report
an upside fiscal fourth quarter in late June. Nike Shares Could Run Up to
$120, p. 1. Retrieved June 2, 2015, from
http://online.barrons.com/articles/nikesharescouldrunupto120143266
3122
3. Schaefer, S. (2015, May 11). The World's Most Valuable Brands. Forbes,
77.
4. Gibson, C., & Gibson, C. (2001). Financial reporting and analysis: Using
financial accounting information (8th ed., p. 307). Cincinnati, Ohio,
Hamilton City: SouthWestern College Pub.
5. Anon, (2015). [online] Available at:
http://investors.nike.com/files/doc_financials/2014/docs/nike2014form1
0K.pdf [Accessed 1 Jun. 2015].](https://image.slidesharecdn.com/accountreport1-150616022558-lva1-app6892/85/Accountreport-FNBE-15-320.jpg)
Accountreport FNBE
- 1. Basic Accounting ACC30205 NAME : NGIENG TIEN YUNG (0320221) TERENCE TAN PENG ONG (0320275) TAN MING HOWE (0320199) ASSIGNMENT : FINANCIAL RATIO ANALYSIS COMPANY NAME : NIKE LECTURER : MR. CHANG JAU HO
- 4. NIKE’S RECENT DEVELOPMENT Since the 1970’s, Nike has come a long way from being a domestic American brand transforming into an international powerhouse for athletic apparel. With the all the crazy advancements in technology, it would sure to have spilled some over into the world of athleticism. Currently Nike features research facilities such as motion capture labs where athletes will perform an action and be recorded on high speed cameras whereby it will be analysed by nurses and coaches advising at which moment in time the weight is located in which internal joint, by gathering these insight Nike is able to develop a better understanding and is able to develop better future products allowing athletes to outperform their predecessors by adding science into the designs of the products, ever improving the material, quality and weight of their apparel, reducing the drag on clothings and incorporating technology as a training companion, such as the newly released fitband a device which encourages the average joe to take the stairs instead of the escalator in a fun and competitive way.
- 5. Profitability The following table shows the calculation and interpretation of NIKE from the year 2013 to 2014 ( US dollars in millions) Profitability Ratios 2013 2014 Interpretation Return on Equity ( ROE ) 2472 10952.5 = 22.6% 2693 10952.5 = 24.5% During the year 2013 to 2014, the ROE has increased from 22.6% to 24.5%. This means NIKE is getting more return from the capital than last year. Net Profit Margin ( NPM ) 2472 25313 = 9.8% 2693 27799 = 9.7% During the year 2013 to 2014, the NPM has decreased from 9.8% to 9.7%. This means the ability of NIKE to control its expenses is worse than last year. Gross Profit Margin ( GPM ) 11034 25313 = 43.6% 12446 27799 = 44.8% During the year 2013 to 2014, the GPM has increased from 43.6% to 44.8%. This means the ability of NIKE to control its cost of goods sold (COGS) expense is better than last year. Selling Exp. Ratio ( SER ) 7796 25313 = 30.8% 8766 27799 = 31.5% During the year 2013 to 2014, the SER has increased from 30.8% to 31.5%. This means the ability of NIKE to control its selling expenses is getting worse. General Exp. Ratio ( GER ) 0 25313 = 0 % 103 27799 = 0.4% During the year 2013 to 2014, the GER of Nike had increased from 0% to 0.4%. The ability of the business to control its general expenses is getting worse.
- 7. Stability The following table shows the calculation and interpretation of NIKE from the year 2013 to 2014 ( US dollars in millions) Financial Stability Ratio 2013 2014 Interpretation Working Capital Ratio (WCR) 13630 3962 = 3.44 : 1 13696 5027 = 2.72 : 1 During the year 2013 to 2014, the WCR has increased from 3.44:1 to 2.72:1. This means the ability of business to pay current liabilities with current assets is getting worse than last year. However,addition, it satisfy the minimum requirement of 2:1. Total debt ratio (TDR) 6464 17545 = 36.8% 7770 18594 = 41.8% During the year 20132014, the TDR has increased from 36.8% to 41.8%. This means the total debt of business has increased. In addition, it satisfy the maximum limit by 50%. Inventory Turnover Ratio ( ITR ) 365÷ 14279 3353 = 85.7 days 365÷ 15353 3715.5 = 88.3 days During the year 2013 to 2014, the ITR has increased from 85.7 days to 88.3 days. This means the business sell their goods is getting slower. Debtor Turnover Ratio ( DTR ) 365÷ 12656.5 3117 = 89.9 days 365÷ 13899.5 3434 = 90.2 days During the year 2013 to 2014, the DTR has increased from 89.9 days to 90.2 days. This means the business is taking longer times to collect the debt. Interest Coverage Ratio ( ICR ) 0+2693 0 = 0 time 33+2693 33 = 82.6 times During the year 2013 to 2014, the ICR has increased from 0 time to 82.6 times. This means the ability of the business to pay the interest is getting better. In addition, it satisfy the minimum requirement of 5 times.
- 9. Investment Recommendation Based on profitability ratio, we obtained the total Net profit margin figure (NPM). The Selling expenses (SER) and general expenses (GER) ratio for nike showed their method of handling the business had worsen even though the gross profit margin (GPM) and return on equity (ROE) had increased. Nike’s ability to pay off their current liabilities is also worsening but still satisfies the 2:1 ratio of staying within the borderline of borrowing. Nike’s total debt has also increased and it satisfies the 50% maximum limit. Their stock turnover has also slowed down and they are taking a longer time to reclaim old debts. On the flip side their ability for paying interest is getting better. In conclusion nike earned more profit in 2014 compared to 2013. The company has shown good promise in terms of revenue growth in the future as it has always managed to stay ahead of the pack not only financially but also product wise. Nike also has received AAA ratings from several different stock analysts since and has proven itself to be a very stable company. Although Nike is a great company but we do not recommend purchasing any shares from this company as it would take over a calculated 30 years to earn back a profit on your investment.
- 11. Balanced sheet
- 14. STOCK ANALYSIS
- 15. REFERENCE 1. NKE Key Financial Ratios. (2015, June 1). Retrieved June 2, 2015, from http://www.nasdaq.com/symbol/nke/financials?query=ratios 2. Jones, D. (2015, May 26). The footwear and apparel giant is set to report an upside fiscal fourth quarter in late June. Nike Shares Could Run Up to $120, p. 1. Retrieved June 2, 2015, from http://online.barrons.com/articles/nikesharescouldrunupto120143266 3122 3. Schaefer, S. (2015, May 11). The World's Most Valuable Brands. Forbes, 77. 4. Gibson, C., & Gibson, C. (2001). Financial reporting and analysis: Using financial accounting information (8th ed., p. 307). Cincinnati, Ohio, Hamilton City: SouthWestern College Pub. 5. Anon, (2015). [online] Available at: http://investors.nike.com/files/doc_financials/2014/docs/nike2014form1 0K.pdf [Accessed 1 Jun. 2015].