The purpose of this project is to find the Weighted Average Cost of Capital (WACC) for Home Depot. Investopedia.com reveals that the WACC is “a calculation of a firm's cost of capital in which each category of capital is proportionately weighted. All capital sources - common stock, preferred stock, bonds and any other long-term debt - are included in a WACC calculation. All else equal, the WACC of a firm increases as the beta and rate of return on equity increases, as an increase in WACC notes a decrease in valuation and a higher risk” (Investopedia.com). We will attempt to provide information regarding the following: 1. Description of how we achieved the WACC. 2. Calculations used to obtain WACC. 3. Explanation of the results. 4. Sources of our data. 5. Discussion of confidence level in our answer, as well as any limiting assumptions if applicable.…
Although it appears that Nike has some inventory management problems, they are clearly growing their net income year over year. From the company perspective, they are effectively leveraging their assets to yield favorable increases in profit year over year, but from the stockholder’s perspective, they are effective leveraging their equity. This shows that although competition increases in the market, Nike’s brand remains relevant and desired within its primary markets. Nike can leverage their brand recognition, liquid capital, and their room for additional risk to focus on their e-commerce platforms, emerging markets, and women’s product…
Many issues should be addressed regarding Joanna Cohen’s WACC calculation. First, to calculate the debt cost of capital, Cohen divided the total interest expense by the company’s average debt balance. This is an issue because she did not take into account the current yield on publicly traded Nike debt. Another issue that should be addressed is the calculation of the equity cost of capital. Using CAPM, Cohen took a 20 year Treasury bond as her risk free, the average Beta for the last 6 years, and a geometric mean for market premium. Also, Cohen calculated the book value of equity and debt instead of using market values.…
NIKE, Inc. is the world’s leading innovator in athletic footwear, apparel, equipment and accessories. Before there was the Swoosh, before there was Nike, there were two visionary men who pioneered a revolution in athletic footwear that redefined the industry.…
INTRODUCTION Founded in 1968 in Oregon, Nike's business activities involve design, development and the worldwide marketing of high quality apparel, equipment, footwear and accessory products.…
The optimal capital structure simultaneously minimizes the cost of debt, the cost of equity, and the WACC.…
From their shoes to their professional athlete contracts with huge stars like Kevin Durant and LeBron James and even just their symbol, Nike is a household name. Its extremely hard to go anywhere without seeing a pair of their shoes, their symbol on a piece of some ones clothing, or even spotting one of their backpacks. But does that mean they would be a good investment? This paper aims to analyze the financial situations of Nike and one of its lead competitors, Under Armour, and help decide whether they have investment potential.…
Nike uses a cross-functional team structure with their advertising. The advertising is outsourced to Wieden & Kennedy of Portland, Oregon with the ad employees housed at the Nike…
Kimi Ford, a portfolio manager for the mutual-fund management group NorthPoint, was reviewing the financials of Nike Inc. to consider buying shares for the NorthPoint Large-Cap Fund that she managed. A week prior, Nike Inc. held an analysts’ meeting to share their 2001 fiscal results and develop a strategy to revitalize the company.…
This report is aimed to indicate how the planning and leading management function can help Nike maximize the financial profit and at the same time, remaining sustainability. Nike, the world's No.1 shoemaker, does more dominating than assisting, to capture a hefty share of the US athletic shoe market. It designs and sells shoes for a variety of sports, including baseball, cheerleading, golf, volleyball, hiking, tennis, and football. Nike also sells Cole Haan dress and casual shoes, as well as athletic apparel and equipment (www.yahoo.com).…
Nike should be held responsible for the working conditions in foreign factories where subcontractors make products the company sells. Although Nike does not actually own the foreign factories, the workers are employees of Nike and Nike is the beneficiary of the products they are making. Thus, Nike is responsible (at least in part) of the working conditions endured by those that work there.…
In January of 1964 Phillip Knight a University of Oregon track athlete and Bill Bowerman, Knight’s coach, founded Blue Ribbon Sports. Their company became incorporated in 1968 and is known today worldwide as Nike. Nike leads the world in the design process, marketing and distribution of a quality, innovative world leading athletic product ranging from footwear, apparel, equipment, and a large variety of accessories for a number of sports and leisure activities. Nike has grown to solely own subsidiaries such as: Converse Inc. who designs and distributes athletic footwear, apparel and accessories. Hurley International which designs, markets and distributes youth and adult action sports apparel, footwear, and accessories. Cole Haan who designs, markets, and distributes luxury footwear, accessories, coats, and handbags. Umbro LTD is a leading soccer brand in the United Kingdom and subsidiary of Nike. Nike of course has the Nike brand itself as well as the world recognized Jordan brand. Nike’s world headquarters is located near Beaverton, Oregon just outside of Portland. Nike is a worldwide brand and organization that operates in over 160 countries. The following information will be used in an effort to analyze Nike’s most recent annual report as well as the most current financial reports and status.…
We have chosen to write about Nike. First of all we are going to make a company description of Nike and write about their history, and then we would like to make a swot analysis, wherein we are going to write about the company’s strengths, weaknesses, their opportunities and their threats. Then we will write about the importance of globalization for Nike’s expanding. After that, we will write about their policies, among these we will mention their environment policy. After this, we will write about their working conditions, on the different Nike factories. And hereafter we are going to write about the American business culture, and then write about their products. Finally, we will round our report off by evaluating it, and by making a conclusion.…
While there are some companies such as Blackberry, that have struggled to keep up with the growing technology changes and advances, there are also companies like Nike, which has continually innovated and increased marketing to survive over time. Nike is an excellent corporation to study which has had continuous success over a lengthy period of time. Nike has outlasted rivals and maintained its position as the top athletic wear producer in the world.…
The mission statement of Nike is to bring inspiration and innovation to every athlete in the world. Planning is to select goals and ways to attain them. Nike has a strategic plan that a company needs in order to succeed at anything. The manger is taking actions in terms of strengths and opportunities. Besides, Nike needs to set goals and determine the best way to overcome weaknesses and threats for the company. The strengths for the Nike’s company will be strong at research and development and it is listed as number one sports brand in the world. As for weaknesses, the retail sector is very sensitive to prices and it depends heavily on market share of footwear. However, the opportunity of Nike has becoming trendy footwear. We can also see that competitors are trying hard to develop alternative brands in order to take away Nike’s market share which is a threat for Nike’s company. The business strategy used by Nike is a product differentiation strategy. Nike focuses on branding advertising, designation of the products, exclusive customer service and high quality products. Product differentiation helps to boost up the sales of Nike. Nike designs most of the footwear for athletic purpose. Nike differentiates its products into variety of ways. For example, Nike segmented its products into three different levels of people which are men, women and children. Each of these segments is categorized based on the physiology and trend of choices. Nike’s company trained their employees with the skills such as interpersonal skills and technical skills. Interpersonal skills are needed by everyone as it helps to work well with other people both individually and in groups. For example, Nike has employees who are very happy working with them by having good atmosphere and having good standards for all the workers who work in the business. Nike’s employees has technical skills which are the job-specific knowledge and techniques needed to perform work tasks from the workers and those…