Accounting Analysis of Nike and Adidas

Introduction

The aim of this paper is to briefly cover a comparative accounting analysis of two major sport wears manufacturers in the world, Nike and Adidas. It should be noted that Nike and Adidas, both are undoubtedly the most successful and internationally recognized sports apparel manufacturers.

Discussion

Upon simple analysis of the financial statements of Adidas and Nike, users can identify the stark differences between the formats of the two annual statements. The reasons for this differentiation can be attributed to the fact that Nike complies with the Generally Accepted Accounting Principles (GAAP) accounting standards and practices set forth by the New York Stock Exchange. On the other hand, Adidas is registered as a public company on the Frankfurt Stock Exchange and therefore complies with the International Financial Reporting Standards (IFRS). The fiscal year truncates for Nike at May 31st, while for the Adidas the end of the year is marked at December 31st.

Revenues

For the fiscal year 2010 and 2011, Nike reported a Total Revenue figure of 19 billion USD and 20.9 billion USD respectively. While for the same periods, Adidas reported an annual figure of 11.99 billion Euros and 13.344 billion Euros respectively. After adjusting for the differentiation in currencies, it can be easily visualized that Adidas was more than successful in increasing its annual sales figure during the year 2011.

Cost of goods sold

The cost of revenue for Nike for the financial years 2009, 2010, and 2011 are 10.2 billion USD, 9.82 billion USD and 11 billion USD. On the other hand, Adidas recorded 5.7 billion Euros, 6.3 billion Euros, and 7 billion Euros.

From the pictorial demonstration, it should be noted that the Nike was comparatively efficient as compared to Adidas during the years 2009 and 2010. However, during the fiscal year 2011, Nike lost its efficiency and the proportion of Cost of Goods Sold as a percentage of Sales increased. It should also be noted that Adidas which was experienced inefficiency in terms of greater proportion of Sales allocated to Cost of Goods Sold during the year 2009 significantly improved it efficiency by reducing the proportion of Cost of Goods Sold as a percentage of Sales during the year 2010. However, during the year 2011, Adidas also recorded an increment in Cost of Goods Sold as a percentage of Sales; nevertheless, the percentage is better as compared to Nike (Libby et al., 2011). .

Accounts receivable

Account Receivables Ratio and ...