Nike,Inc. Essay

Today, Nike is one of the most recognizable brands in the world. Founded fifty years ago, this company has managed to overtake and leave behind many other sports brands. To date, its creator – Phil Knight is considered to be one of the richest US persons. Nike history goes back to 1964. As a matter of fact, it was possible to find either expensive quality or on the contrary cheap and quite uncomfortable. In fact, a middle option did not exist.

Phil Knight, who faced with the same problem on his own experience, drew attention to this fact. Together with his friend and coach Bill Bowerman, he decided to order inexpensive but pretty good shoes in Asian countries and then sell them in the United States. They founded the company named Blue Ribbon Sports, which soon turned into all known Nike. “Carrying on the traditions of Nike’s original sport researcher Bill Bowerman” (Nike, 2016, para. 1), the company continues to produce comfortable and high-quality products. In many ways, the company describes itself as innovative. This is a challenge to the corporation itself to be successful at the international market. In the past 10 years, Nike doubled the company’s revenue and the earnings per share. As a result, Nike has no plans to slow down in the near future.

If we consider that it took 40 years for Nike to reach the annual revenue of $ 20 billion, and in just four years to hit more than $ 30 billion. Nike shops are opened almost in every country around the world. The company constantly rises above complexities that create uncertainty to stimulate growth. Nike’s financial statement analysis was favorable at the end of the fiscal year. The conventional end of the financial year for the Nike Corporation is considered to be May 31 of the relevant year. In this fiscal year, the company managed to get 30.6 billion in revenue, $ 14.1 billion in gross profit and $ 3.2 billion in net profit. As a result, the corporation managed to keep only 11 % of the total revenue. It was able to increase revenues by $ 2.8 billion, an increase of 10 percent in the 2015 fiscal year. Production costs were increased by only $ 1.2 billion, an increase of 8 percent. There is a positive trend of increasing 2 per cent of revenues to the production costs (“An Investment Analysis Case Study,” n.d., p. 2).

Also, Nike was able to increase operating income, while minimizing sales and marketing costs. During the year, the operating profit of the corporation showed an increase of 19 percent, which is 10 percent more than last year. On this basis, net sales showed an increase of 22 percent, an increase of 13 % over last year. According to Mr. Parker, he wanted to take a step back and remain equally focused on how they have achieved this success. Victories come out because of their passion for sport. They are not just the world’s best sports brand, but they are big sports fans, who observed some amazing moments in the past. Nike’s assets in 2015 showed an increase of 16 percent (they are more than 10 percent) and amounted to 21.6 billion US dollars. At the same time, shareholders’ stocks also demonstrated an increase by 17 percent and amounted to 12.7 billion instead of 10.8 billion.

The company’s attractiveness for investors and individuals remain in good condition. This is due to the fact that the share of net income per stock showed $ 3.8; it shows an increase of 25 percent from last year, instead of $ 3.1. This means that the receipt of dividends to shareholders will be good. Nike has a very large cash flow from operating activities, which is enough for development, so the ratio of debt to the capital is always at the level of 10 %. It speaks of a very conservative financial policy in terms of debt. This is a good sign. Also, problems with liquidity will never happen (Damodaran, n.d., p. 5).

The company’s profitability is also wonderful – always more than 20 %, generally in the region of 27 % in the last year. It is a very good tendency. In general, it is a very good company with a good reputation of the goods, with good financial policies, with remarkable fundamentals. All in all, it is recommended to purchase Nike’s shares, but only when the price falls to the level of approximately $ 53.

Thus, taking the above-mentioned information into consideration, it is possible to draw a conclusion that given the increasingly growing interest in sport, it can be assumed that companies that produce products will prosper and develop. Undoubtedly, Nike is definitely this company. This manufacturer of sportswear and shoes is steadily growing and developing for many years now. Constant new successful developments provide a good competitive edge and profitability. At present, there are no prerequisites that may somehow affect the company. Respectively, putting money into Nike is a good investment prospect.

Nike’s dynamics of share growth is maintained very positive, surpassing $ 82 per share. The company’s secret to success is very simple: active advertising and a quality product at an affordable price. The opening of new Nike factories making sportswear and footwear in Asia contributed to the reduction of the cost of the company’s products and the introduction and the Asian markets. It is expected that in the foreseeable future, Nike’s assets will grow in the future. All in all, the company is worth a short term investment in order to preserve capital.

References

An Investment Analysis Case Study: Nike. (n.d). Retrieved from http://people.stern.nyu.edu/adamodar/pdfiles/cfexams/Nikecase.pdf

Damodaran, A. (n.d). Nike: To Do or Not to Do! Stern School of Business. Retrieved from http://people.stern.nyu.edu/adamodar/pdfiles/cfexams/NikePres12.pdf

Nike, Inc. (2016). Retrieved from http://about.nike.com/

The terms offer and acceptance. (2016, May 17). Retrieved from

[Accessed: March 29, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016.

[Accessed: March 29, 2024]

freeessays.club (2016) The terms offer and acceptance [Online].
Available at:

[Accessed: March 29, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 29, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 29, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 29, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 29, 2024]
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