Nike

Introduction

Nike, the company with the famous logo 'Just do it' is the largest athletic footwear selling company in the world with a 33% global market share. Nike's main focus is to design, develop and market worldwide its footwear, apparel, equipment, and its accessories. Nike was incorporated in 1968, Oregon, and is one of the largest and a very well known seller of athletic footwear and apparel in the world.

Financial Analysis

Return on Assets

The return on assets ratio has been considerably increasing from 10.37 in 2002 to 14.1 in 2006. Not only this but also the ratio is higher than industry average which is at 14.1. Creditors, bondholders, and shareholders like to see high return on their investment. This indicates that the business is sufficiently using its assets.

Return on Investment

Return on investment was all time high in 2002 with 168.59, then it declined considerably in 2003 to 162.3 and in 2004 it gained its momentum and reached 215.27. Since then it is increasing considerably. This ratio tells the owner whether or not all the effort put into the business has been worthwhile. This shows how much return management has earned on all long-term capital; that which is owned by the shareholders and that which is contributed by long-term creditors.

Net profit Margin

The higher the net profit margin the better. Net profit margin ratio reached 9.31% all time high in 2006 as compared to previous years. Industry average stands at 7.47%. This indicates that the company is generating enough sales to leave considerable profits. The trend also shows how well the company is managing its operating costs.

Liquidity RatioQuick ratio: The trend indicates that the quick ratio declined in 2006 to 1.87% whereas it was 2.1% in 2005. This shows that the company has to rely on sales to pay off its bills.

Current ratio

Nike Inc.'s current ratio has also decreased from 3.18 in 2005 to 2.81 in 2006. The margin of safety is also taken into account for possible losses in the current assets like bad debts, inventory shrinkage etc.

Leverage Ratio Debt equity ratio

The Debt equity ratio for Nike Inc. has been fluctuating over the last five years between 0.11 and 0.19. In 2006 it was at 0.11 which is still good for the company as higher ratio brings greater risk to present or future creditor. Too much debt is not healthy for the business as it puts the business at risk whereas too little debts means business is not realizing its full potential.

Balance Sheet

See appendices.

Ownership

Ownership Information

Shares Outstanding

396.00 Mil

Institutional Ownership (%)

86.62

Top 10 Institutions (%)

37.10

Mutual Fund Ownership (%)

1.40

5%/Insider Ownership (%)

37.02

Float (%)

62.98

Ownership Activity

Description

# of Holders

Shares

Total Positions

787

342,999,936

New Positions

71

0

Soldout Positions

230

0

Net Position Change

-323

-15,443,354

Buyers

297

29,136,408

Sellers

620

-44,579,760

Number of Employees

26000employees

Law Suits Involving The Company

In June, Chinese animator Zhu Zhiqianq, of Xiao Xiao fame, files a lawsuit against Nike for plagiarizing his cartoon stickmen in their commercials. Nike representatives deny the accusations, claiming that the stickman figure lacks originality, and is public domain. Zhu eventually wins the lawsuit, and Nike is ordered to pay $36,000 to the cartoonist. However, in June 2006, the ruling is overturned in ...