Nike Inc.

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Category: Business and Industry

Date Submitted: 09/23/2012 08:30 PM

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About Nike, Inc.

NIKE, Inc. based near Beaverton, Oregon, is the world's leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. Wholly-owned Nike subsidiaries include Cole Haan, which designs, markets and distributes luxury shoes, handbags, accessories and coats; Converse Inc., which designs, markets and distributes athletic footwear, apparel and accessories; Hurley International LLC, which designs, markets and distributes action sports and youth lifestyle footwear, apparel and accessories; and Umbro Ltd., a leading United Kingdom-based global football (soccer) brand.

Section I – Ratio Analysis

1. Liquidity ratios measure the short-term ability of a company to pay its maturing obligations and to meet unexpected needs of cash. A commonly used measure of liquidity is the current ratio. The current ratio is calculated as current assets divided by current liabilities. Current ratio for Nike along with the industry and S&P 500 as the followings:


CURRENT RATIO 3.00 2.90 1.40

Nike’s current assets are three times bigger than its current liabilities. Therefore its current ratio is 3:1. Nike’s current ratio is approximately the same as the industry for footwear, apparel, equipment and accessory products of 2.90:1. However, current ratio for S&P 500 is twice lower than Nike and Industry. Nike’s liquidity seems adequate, because higher ratio suggests favorable liquidity.

2. Long-term creditors and stockholders are interested in a company’s solvency – its ability to pay interest as it comes due and to repay the balance of a debt due at its maturity . Solvency ratios measure the ability of the company to survive over a long period of time. Debt to equity ratio is one source of information about long-term debt-paying ability. It is ratio of liabilities divided by stockholders’equity. Lower value suggests favorable solvency. Debt to...