A Financial Ratio Quarterly Trend Analysis of Nike, Inc.

Topics: Financial ratios, Financial ratio, Balance sheet Pages: 18 (4477 words) Published: February 9, 2012
A Financial Ratio Quarterly Trend Analysis of

Nike, Inc.

Stock Symbol: NKE

Listed on the New York Stock Exchange

In Partial Fulfillment of the Requirements of the Course:

FIN 6406

Report Completed By:

1. Introduction

A financial ratio quarterly trend analysis was completed to provide the reader with a clear assessment of the financial health of the company: NIKE International. Just knowing that this company chose a symbol that references the winged goddess of victory seems to have been a premonition for the designer of the ‘swoosh’ as well as the founder, Phil Knight, of NIKE. (Hinker,)

Our team chose this corporation to analyze NIKE’s financial data because: • NIKE is easily recognizable as a financially strong company after producing a high-quality product in their athletic shoes. • Researching a company with such level of recognition supported easier access to information for internationally based team members. • NIKE athletic shoes also supported the group’s ability to make comparisons with another company such as Adidas; • Knowing that the company started very small and grew to what seems a limitless boundary seemed intriguing to us and promoted a desire to understand their financial growth.

The team chose three significant websites: MSN Money, NIKE and Yahoo Finance for our research but included other sites to augment the data in this report. We obtained financial statements from NIKE to analyze the company’s quarterly trends using the last four quarters of information and compared them to Adidas, the second largest company in the world after NIKE for manufacturing sporting goods.

The team then created a SWOT – strength, weakness, opportunity and threat analysis on NIKE to incorporate qualitative insight to the financial data. While financial data and a SWOT assessment helps the reader understand the state and direction of this company, an analysis would not be complete without assessing the company’s record of ethical compliance. As a result, team members evaluated the company’s business ethics to complete the assessment of this company and provide the reader with reasons for our conclusions and recommendations on investing and/or lending money to this company.

2. Financial Ratio Calculation and Analysis

1. Methodology

We obtained the quarterly financial information: balance sheets, income statements, and cash flow statements that reflected the four most recent quarters on NIKE with quarter endings: May 31st, 2010 – Q1: August 31srt, 2010 – Q2; November 30, 2010 – Q3; February 28, 2011 – Q4 from the following internet sites:

• Nike.com

• MSN Money

• Yahoo Finance

• Forbs.com

Price per share was obtained from Yahoo Finance and compared with MSN Money. The rest of the information was taken from the Q10 filings published on NIKE.COM, and compared with the SEC filings on Yahoo Finance. For industry analysis we used data from Adidas’s statements, so we could compare how Nike has performed over its most substantial competitor. We plugged in all the data into an excel template to come up with all the ratios we have provided.

2.2 Ratio Computations The following table reflects the ratio computations of NIKE based on the previous four quarters.

NIKE: Key Financial Ratios

|Liquidity Ratios |Q1 |Q2 |Q3 |Q4 |ANNUAL | |Current Ratio |3.26 |3.35 |3.36 |3.05 |3.05 | |Quick Ratio |2.65 |2.65 |2.59 |2.47 |2.47 | |Net Working Capital Ratio |0.53 |0.53 |0.53 |0.51 |0.51 | |Current Liabilities to Inventory Ratio |1.65 |1.42 |1.38 |1.32 |1.32 | |Cash...

Bibliography: McGirt, Ellen. (2010). How nike 's ceo shook up the shoe industry . Fast Company, Retrieved from http://www.fastcompany.com/magazine/148/artist-athlete-ceo.html
Mickle, Tripp
Nike Inc – Company Financial Statemenst (NKE): Interim Balance Sheet – MSN Money, Retrieved May 31, 2011, from http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?1stStatement=Balance.
NIK, Inc. Reports Fiscal 2011 Third Quarter Results – Marketwatch, Retrieved May 26, 2011 from http://www.marketwatch.com/story/nike-inc-reports-fiscal-2011-third-quarter-results-2011.
Nike,inc. revenue performance. (2011). Letter to Shareholders, Retrieved from http://media.corporate-ir.net/media_files/IROL/10/100529/nike-ar-20100804/index.html#select_financials
Nike shares outstanding
NKE Analyst Estimates Nike Inc. Common Stock Stock-Yahoo! Finance, Retrieved May 30, 2011, from http://finance.yahoo.com/q/ae?s+NKE+Analyst+Estimates.
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