Nike‚ Inc.: Cost of Capital Case 15 Financial Administration FINC 5713-180 Team 1 Fall 2013. October 8‚ 2013. Introduction Kimi Ford a portfolio manager at NorthPoint Group which is a mutual-fund management firm‚ is considering to buy some shares from Nike‚ inc even if it’s share price had declined from the beginning of the year‚ for the Northpoint Large-cap fund she managed which invested mostly in Fortune 500 companies and it was doing well despite the decline
Premium Stock market Weighted average cost of capital Stock
this report we focus on Nike’s Inc. Cost of Capital and its financial importance for the company and future investors. The management of Nike Inc. addresses issues both on top-line growth and operating performance. The company’s cost of capital is a critical element in such decisions and it is important to estimate precisely the weighted average cost of capital (WACC). In our analysis‚ we examine why WACC is important in decision making and we show how WACC for Nike Inc. is calculated correctly. Also
Premium Weighted average cost of capital Arithmetic mean Mathematics
Nike‚ Inc Cost of Capital NorthPoint Large Cap Fund was considering whether to buy Nike’s stock or not. Nike was experiencing declines in sales growth‚ declines in profits and market share. However‚ Nike decided it would increase exposure in mid-price footwear and apparel lines‚ and it also commits to cut down expenses. The market responded with mixed signals to Nike’s changes. Kimi Ford‚ the portfolio manager at NorthPoint‚ did a cash flow estimation‚ and ask her assistant‚ Joanna Cohen to estimate
Premium Financial markets Investment Mathematics
Nike Inc.: Cost of Capital The Weighted Average Cost of Capital (WACC) is the overall required rate of return on a firm as a whole. It is important to calculate a firm’s cost of capital in order to determine the feasibility of a particular investment for a firm. I do not agree with Joanna Cohen’s WACC calculation. She calculated value of equity‚ value of debt‚ cost of equity‚ and cost of debt all incorrectly. For value of equity‚ Joanna simply used the number stated on the balance sheet instead
Premium Weighted average cost of capital Dividend yield Investment
Introduction Kimi Ford is a portfolio manager at NorthPoint Group‚ a mutual-fund management firm. She is evaluating Nike‚ Inc. (“Nike”) to potentially buy shares of their stock for the fund she manages‚ the NorthPoint Large-Cap Fund. This fund mostly invests in Fortune 500 companies‚ with an emphasis on value investing. This Fund has performed well over the last 18 months despite the decline in the stock market. Ford has done a significant amount of research through analysts’ reports
Premium Management Learning German language
1. Weighted Average Cost of Capital (WACC) is used to determine the average cost of financing a company. Companies are funded using both debt and equity and both require varying rates of return. WACC allows you to put a “weight” on the different types of financing and their differing rates to get a total cost of capital. Team 12 does not agree with Joanna Cohen’s WACC calculation because we feel she took some liberties in her numbers‚ the most notable being that of equity. Ms. Cohen used book
Premium Stock market Weighted average cost of capital Stock
Case Analysis of Nike‚ Inc.: Cost of Capital Apparently‚ the issue of Nike’s case is to control and check the calculation cost of capital done by Joanna Cohen who is the assistant of a portfolio manager at NorthPoint Group. But I am willing to tell you that it can be a complex case in which we can doubt about sensitivity analysis done by Kimi Ford (portfolio manager) because her assumptions such as Revenue Growth Rate‚ COGS / Sales‚ S &A / Sales‚ Current Assets / Sales‚ and Current Liability
Premium Finance Stock Weighted average cost of capital
Nike Inc. Case Number 2 Nike Incorporated’s cost of capital is a vital element when addressing opportunities regarding top-line growth and operating performance. Weighted Average Costs of Capital (WACC) is an essential estimation that is needed in order to determine the amount of interest that will be paid for each additional dollar financed. This translates to be the minimum overall required rate of return that the firm will keep. We disagree with Johanna Cohen’s assessment of Nike due to two
Premium
management firm. In July 2001‚ Ford considered buying shares of Nike‚ Inc.‚ the well-known athletic shoe manufacturer. It would be prudent of Ford to base her assessment on Nike’s financial reports for 2001. Around the same time‚ Nike held an analysts’ meeting to disclose those financial results. They also addressed ways to revitalize the company‚ since share price was beginning to decline and revenues had plateaued at around $9 billion. Although Nike projected a rosy future‚ many analysts had mixed reactions
Premium Weighted average cost of capital Financial markets Finance
Graduate School of Business Administration University Version 2.0 of Virginia UVA-F-1353 Version 2.0 Nike‚ Inc.: Cost of Capital On July 5‚ 2001‚ Kimi Ford‚ a portfolio manager at NorthPoint Group‚ a mutual fund management firm‚ pored over analyst write-ups of Nike‚ Inc.‚ the athletic shoe manufacturer. Nike’s share price had declined significantly from the start of the year. Kimi was considering buying some shares for the fund she managed‚ the NorthPoint Large-Cap Fund‚ which invested mostly in
Premium Balance sheet Revenue Generally Accepted Accounting Principles