Financial Report Adidas

Topics: Financial ratio, Adidas, Herzogenaurach Pages: 33 (5980 words) Published: November 15, 2011
Student number: 0880732

Term paper
Handelshøyskolen BI

- Adidas AG -

Exam code and name

EXC 25093 Financial Statements and Valuation

Hand-in date:

Place of study:
BI Oslo

Bachelor in Business and Administration

Table of contents

Sports Apparel Industry1
Economic Situation2
- Financial Statement Evaluation2
- Profitability ratios3
- Efficiency ratios4
- Liquidity and cash flow ratios5
- Investment ratios5
Multiple Comparisons Valuation Model6
Forecasting Fiscal Years 2011-20147
- Sales growth7
- EBIT margin7
- Inflation7
- Capital Expenditures8
- Depreciation8
- Amortization8
- Net operating working capital8
- Tax and interest income/expense8
Free Cash Flow Valuation Model9
- Beta Equity10
- Cost of equity11
- Weighted average cost of capital12
- Value of equity12
Appendix 1: Reformulated Balance Sheet Adidas € mill15
Appendix 2: Reformulated Balance Sheet PUMA € mill16
Appendix 3: Reformulated Income Statement17
Appendix 4: Ratios for Adidas18
Appendix 5: Ratios for Puma19
Appendix 6: Multiple analyses21
Appendix 7: FCF Valuation Model: Economic Balance Sheet22


The purpose of this report is to evaluate how the Adidas Group did during the recent three years in respect of financial statements ratio. Furthermore, it will provide an assessment of the intrinsic value of the shares of Adidas AG. The first part of this report will briefly describe Adidas and the industry it’s competing in. Further on, there will be used a cross-sectional analyses to evaluate the performance and to compare Adidas to a competing company. The chosen company is Puma, due to equal fiscal years. The second part of this report consist of a multiple analysis and a free cash flow valuation model which will provide a valuation of Adidas’s shares. All of the information and numbers are conducted from financial and annual reports. Regarding forecasting the next years, historical numbers are used as a benchmark to predict future development.

Adidas AG
Adidas AG is a German sports apparel manufacturer, founded in 1948 by Adolf Dassler. Adidas AG is the parent company of Adidas group, which consists of the Reebok Company, Golf Company and Rockport. In addition to sportswear, Adidas produces bags, watches, eyewear and other sports and clothing related goods. At the moment they are the largest sportswear manufacturer in Europe. On a world basis, they are rank as #2 after American rival Nike, accordingly to Dow Jones Industry: Sports Clothing/Footwear. Adidas strategic goal is to be the leading manufacture within the sporting industry, which will be reach thru several key success factors. Adidas will strive to create a culture of innovating, challenging themselves and embrace change. In 2010 Adidas announced Route 2015, which is a strategic plan to become the leading sports producer in the world. With respect to shareholders, Adidas AG aims to create value for shareholders and investors through significant cash flow. Adidas mission is as followed: strive to be the global leader in the sporting goods industry with brands built on a passion for sports and a sporting lifestyle. ( Adidas is a major sports and event sponsor and are the key sponsor and supplier to National Basketball Association (NBA) and the main sponsor to New Zealand’s rugby team. In addition they sponsor some of the major teams in European football such as Real Madrid.

Sports apparel Industry
The sport apparel industry consists of many players. The four biggest competitive rivals are Nike Inc, Adidas AG, Pou Chen Corporation and Puma...
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