Analysis of Ratios Liquidity Ratios Current Ratio= CA/CL Current ratio is a financial ratio that evaluates if a business has an adequate amount of resources to cover its debt over the next business cycle (typically 12 months). It does so by relating company's current assets to its current liabilities. Standard current ratio values differ from industry to industry. The higher this ratio, the more proficient the company is to pay its debt. A problem with the current ratio is that it accounts for inventory, which is not as liquid as other current asset accounts, and may lead to a disingenuous analysis. Another problem arises with this ratio because it accounts for the receivables account, which may overvalue the ratio, especially if the business …show more content…
However, Nike seems to be doing the opposite, which is giving a high ratio. Debt per Equity Ratio = Total Debt/Total Equity The debt per equity ratio shows to what extent a company’s assets are either financed by debt or equity. A high ratio indicates aggressiveness on behalf of the company to finance its growth through debt. Skechers’s debt per equity ratio slightly decreased from the year 2012: from 0.462x to 0.443 which is an indicator that Skechers are keeping a close eye on debt and are trying to finance the company through equity and this is apparent when we look at the Skechers financial statements for the years 2012 and 2013 where equity increased at a higher amount than debt. When we compare Skechers’s ratio (0.443) to that of the Nike (0.721), we realize that it is much higher than Sketcher’s which might be that Nike is taking safe measures when it comes to financing themselves: which is through debt. But at the same time it is a very high and risky ratio. Equity Multiplier= Total Assets/ Total …show more content…
This ratio is of importance to new investors and suppliers because it shows the long run sustainability of a company. Skechers’s decreasing long-term debt ratio is a sign that the company is trying to insure its survival into the long run. This decreasing trend was achieved by a combination of decreasing long-term debt and increasing equity from the year 2012 to 2013. Although Skechers seems to be trying its best to decrease this ratio and maintain its long-term sustainability, its ratio (10.621) is still a bit higher than Nike’s (10.051). For Sketchers, this decrease in the LTM means that they are on the right track, but it still needs some modifications to do for it to. Coverage Ratios Times Earned Ratio= EBIT/Interest The Times Interest Earned ratio is a measure of the company’s preparedness to cover its debt payment by calculating the number of times it can honor its interest payments before paying
Debt - Equity ratio was included to show that both companies are financed with a large portion of debt, yet remain
Rentmeester v. Nike, Inc. In 1984, Nike signed a $2.5 million dollar shoe endorsement with then NBA rookie, Michael Jordan. What shortly became a household name, Air Jordan’s exceeded Nike’s expectations by generating over $100 million dollars in its first year on the market. Since its launch, Air Jordan’s has gone through a series of brand changes, but it was the development of the infamous Air Jordan’s III logo or the “jumpman” silhouette, that inaugurated Air Jordan’s as one of the most iconic brands in the world.
Abstract The sole purpose of corporations is to amass profits for shareholders and in doing that, there should be innovative elements in such corporations. However, to gain market share and maintain profits above competitors, the consideration should focus on balancing company’s performance and meeting ethical standards in a globalized world. This will determine both the success of the company and the criticism that might be harmful to its brand. In this paper, Nike Inc., a very successful company, strategically and innovatively expanded its business operations across the globe with huge profits to compensate its hard work, but not without a price.
Their current ratio is 1.4% (total current assets/total current liabilities). According to the Risk Management Association of Financial Ratio Benchmarks, the current average ratio is 1.5%. In 2014, the current ratio for the firm was 1.46% while the average ratio in the industry (NAICS 311330) was 1.6%. The company’s net property and equipment in 2015 is worth 2.6 million dollars, a slight increase from 2014, which was 2.3 million. The company is considering taking on some debt to increase their production capabilities.
2.0 Competitor Analysis The industry that Under Armour is involved with is extremely competitive, with competing against big names such as Nike or Adidas. Although it’s hard at the beginning, but customers want to have the highest quality apparel therefore they turn to Under Armour. Under Armour stays in the competition by having high quality products, and also by signing endorsements deals with major athletes (Owusu, 2017). By having major athletes represent Under Armour, means the company will be bringing in "big money" because they will bring up the brand’s popularity. The major competitors in this industry are of course inclusive of big names such as Adidas, Nike, Dick’s Sporting Goods and Puma.
Internal Analysis When conducting an internal analysis you must know the firm’s resources and capabilities. Nike’s resources are assets from succeeding in their industry. These resources include financial resources, physical resources, human resources and organizational capabilities. Firms Resources & Capabilities: Human Resources-. The company displays a strong workforce of over 30,000+ employees.
Company Description Nike believes diversity and inclusion drives innovation that lead to a competitive advantage. Nike has a broad base of suppliers that actively and significantly support their business requirements. Nike’s Global Procurement team manages the procurement process, including selecting and contracting with the right suppliers for the right goods and services. They have also begun to reduce Nike 's footprint and lessen their impact.
When a person hears or sees the word America, what do they think? America is a country that almost everyone in the world knows about because there are certain words and phrases that can be used to describe it. Some common terms are sports, equality, the melting pot, powerful, freedom, hard working, and some more. All of these words make up what is known as the American Identity. This American Identity has been built up over time by people’s actions and thoughts.
NIKE The Factors that Led to Success and Failure of Nike in its Venture across International Markets Abishek TR* Abstract- Key words: INTRODUCTION The largest American suppliers of athletic shoes, apparel, and sports equipments .At the same point of time ,this company is known worldwide .The Success of this company is the result of the various strategies used in the international market expansion which helped them to enter into new markets and to strengthen its position in the traditional ones .
In Greek mythology she is known as the goddess of victory whether in battle or in peace. She was the daughter of Pallas and Styx. She was also known by the Romans as Victoria. She was the sister of Zelos the god of rivalry, Bia the god of force, and Kratos the god of strength.
Micro and Macro Environmental factors that influence Marketing decisions (LO 2.1) Micro Environment: This indicates those elements over which the marketing firm has control or which it can use in order to gain information that will better help it in its marketing operations. Furthermore, these are the factors close to a business that have a direct impact on its business operations and success. It is important to carry out a full analysis of micro environmental factors prior to decide corporate strategy.
Consumer behavior towards Nike products Marketing is collaborating the value of a product, service or brand to customers, as a driving force to promote or sell that product, service or brand. Marketing procedures and skills embrace selecting target markets by carrying out a market analysis and market segmentation, as well as taking into account the consumer behavior and advertising a products value to customers. Marketing is the utmost vital aspect of developing and enlarging your business, and is a speculation that will recompense for itself over and over again. The term “marketing mix,” was first devised by Neil Borden, the president of the AMA (American Marketing Association) in 1953.
Price Strengths 1. Low Cost Manufacturing Nike has a company who use the low cost manufacturing for production footwear. All of the Nike’s footwear virtually is manufactured outside of the United States by independent contract manufacturers such as Vietnam, China and Indonesia. Nike was operate multiple factories around the worlds. In 2014, Vietnam, China, and Indonesia manufactured roughly about 43%, 28%, and 25% of total Nike branded footwear and it has also operations in other country such as Argentina, Brazil, India, and Mexico.
When this source is used up or no longer available and the firm is compelled to use external financing, debt is preferred over equity. Debt is preferred over equity because the agency costs involved with the issuance of debt are lower. An issue of debt signals confidence and it signals that the shares are overvalued. On the other hand, an issue of equity signals that the share is currently undervalued. This phenomenon is referred to as adverse selection (Frank & Goyal,
The current ratio is a liquidity and efficiency ratio that measures a firm's ability to pay off its short-term liabilities with its current assets. In the year 2012, KHB had a current ratio of 1.688 but it comes to decrease in 2013 to a 1.642. The ratio in the year 2014 was 1.670 indicating a slight increase. The competitor of KHB, the PMMB had a current ratio of 4.785, 4.012 and 3.622 from the year 2012 to 2014 respectively. A current ratio should be more than 2.0 as a higher current ratio indicates a more promising current debt payments.