Submitted by: Submitted by omerbayrak
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Category: Business and Industry
Date Submitted: 03/30/2015 10:20 AM
NIKE: ESTIMATING COST OF CAPITAL
OMER BAYRAK
WILMINGTON UNIVERSITY
As of company profile, Nike Inc. is an American cosmopolitan company in consumer discretionary sector which designs , develops and markets apparel, athletic footwear, textile equipment and accessories under Apparel & Textile products industry.
The company was founded by former athlete, Philip Knight and his coach Bill Bowerman in 1964. Currently, it has more than 700 stores across the world, heavily located in Asia including, China, Taiwan, Thailand and Malaysia.
Despite the existence of formidable competitors in apparel and textile industry such as, Adidas, AG. Nike, Inc. draws the attention as leader of sector. According to current stock market reports, by the end of May , 2014, total revenue of the company was expressed $ 27,799,000, increasing noticeable amount as compared to total revenue of May 31, 2013 with $ 25,313,000 and of May 31, 2012, with $23,331,000. Under the light of the financial statistics declared in Income statements in turn, we can easily comprehend the increase in total revenues of company since 2012.
As for particular case of Kimi ford, faced in 2001, Nike’s share prices has declined significantly from the beginning of the year. According to income statement statistics, since 1997, total revenues were at around $9,000,000. Nevertheless, net income of the company decreased from $795.8 million to $589.7 million between 1997 and 2001. Management team of Nike released their strategic plans to boost top-line growth and to boost operating performance. Hence, the company managers decided to develop more athletic shoe products for midsize buyers. Nike also decided to diversify their apparel line. Besides that, they tried to control cost of expenses.
In this scenario, Cohen examined two types of cost because the total liabilities of company are consist of current liabilities which includes current portion of long term debt, notes payable, and long term debt, ....