Financial Analysis: Nike

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Nike Inc.|
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Table of Contents
NIKE Inc.3
Analyzing Nike’s 10-K4
Outside information about company and the industry:8
Analyzing Financial Strength of Nike12
Broad Audit Plan:14
Appendix18
Reference:18

NIKE Inc.
Nike is an American multinational organization which has worldwide presence and their principal business is design, development and worldwide marketing and selling of high quality of footwear, apparel, equipment, accessories and services. It is the largest provider of athletic shoes and sports equipments worldwide. It is headquartered in Washington County, Oregon in the USA. It was founded way back in 1964 as Blue Ribbon Sports by Phil Knight and Bill Bowerman. It eventually became NIKE Inc. in 1978. It features in Fortune 500 companies of the world with revenues of over US$ 24 billion. It is a public firm and it is listed on NYSE stock exchange as NIKE. They sell their products to retail accounts through NIKE owned retail outlets and Direct To Consumer, an internet channel, and through a mix of independent distributors and licensees in approximately 190 countries around the world. Their products are manufactured by independent contractors. They manufacture all of their footwear and apparel products outside the United States while equipment products are also produced inside the United States apart from foreign countries. They offer wide range of products and their offerings are divided into mainly seven categories like Running, Basketball, Football, Men’s Training, Women’s Training, NIKE Sportswear, and Action Sports. Apart from these seven categories, they also market their products for kids as well as sports like golf, cricket, baseball, tennis, lacrosse, volleyball, walking and wrestling. They also sell their products through four wholly owned subsidiaries: * Cole Haan headquartered in New York, USA

* Converse Inc headquartered in Massachusetts, USA
* Hurley International LLC headquartered in California, USA * Umbro International Limited headquartered in Cheadle, UK As part of their long term plan, they continually evaluate their existing portfolio of business to ensure highest returns. Nike also sponsors many high profile sports personalities and teams in varied range of sports with the highly recognized trademarks of “Just Do It” and Swoosh logo. Taking the above information into consideration, one can understand how business model of Nike can quickly complicate an audit. Now let us proceed to analyze important portions of the Nike audit. Analyzing Nike’s 10-K

a. Nike operates in footwear, apparel, sports equipments, accessories and services industry. b. Primary Products as discussed above can be divided into seven main categories: * Running
* Basketball
* Football (Soccer)
* Men’s training
* Women’s training
* Nike Sportswear
* Action Sports
Apart from these, they also market products designed for kids and other athletic and recreational uses in sports such as baseball, cricket, tennis, volleyball, lacrosse, outdoor activities, golf, American football, walking and wrestling. They also sell sports apparel and accessories for most of the above categories as well as athletic bags and accessory featuring same Nike logo. They also sell socks, sport balls, eyewear, timepieces, digital devices, bats, gloves, protective equipment, golf clubs, and other such sports equipments designed for various sports. Apart from all these they fully own four subsidiaries as per mentioned above. They sell dress and casual wear for men and women under Cole Haan brand, athletic and casual footwear, apparel under Converse brand, action sports and lifestyle apparels under Hurley brand and finally athletic and casual footwear and apparel especially for football under Umbro brand. c. The main raw materials used in footwear products are:

* Natural and synthetic rubber
* plastic compounds
* nylon...
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