Nike cost of capital executive summary

The desire to prevent situations such as these from continuing to occur, we have initiated a more aggressive program to review product collaborations that are outside of our core basis of products.

We see much potential in the lower price points and plan to meet the needs of those markets. Management of Debt - Weakness Despite the lower percentage of assets that are borrowed to finance Nike, our times interest earned ratio is weaker than the industry average.

Successful projects can realize immediate profitability while unsuccessful projects may be discontinued without enduring materially large losses. We have just recently changed our Nike cost of capital executive summary period from 90 days to 60 days as an attempt to encourage faster payment.

In these instances, Nike may choose a defensive strategy to remedy the current situation. We had to terminate 51 employees. Neither the current or quick ratio exceeds the industry average substantially enough to be considered a true strength. This can be interpreted as a strength as we do not rely as heavily as our competitors on debt financing.

Steps are being taken to alleviate the problem of collecting accounts receivable in a more timely fashion. At times, we need to adjust our posture in relation to a particular product line or area of products. Due to the lead Nike possesses in the industry, we can afford to look long-term and place a greater emphasis on innovation as opposed to other companies with a short-term outlook attempting to improve upon existing products and services.

Nike Executive Summary

While establishing these policies is a step in the right direction for Nike, the difficult task at hand will be the implementation of the aforementioned goals of the new labor initiative to ensure the success of the program. We may also choose a catch-up strategy and mimic what is working well for other companies in the industry.

Due to our ability to quickly turnover inventory, Nike benefits from greater cash flows, reduced storage costs, and less spoilage. While Nike has had various policies in place, weaknesses still exist in regards to labor policies in overseas locations. Reducing inventory levels was a key initiative for Nike in fiscal year Focus — Weakness Focusing on applied research can be a weakness as well.

Nike will be organizing the internal business by gender as opposed to sport category and conducting increasing amounts of research addressing the buying habits of men, who tend to be item-driven, and women, who tend to be collection-driven, with specifically targeted product lines. The quick ratio of 1.

The current ratio, while not a major strength, shows that Nike is inline with the industry concerning ease of converting assets to cash to cover short-term obligations. The locations are geographically dispersed which works well in our mission to be a truly global company.

Increasing the minimum age of footwear factory workers to 18, and minimum age for all other light-manufacturing workers apparel, accessories, equipment to 16; Expanding education programs, including junior and high school equivalency courses, for workers in all Nike footwear factories; Increasing support of its current micro-enterprise loan program to 1, families each in Vietnam, Indonesia, Pakistan, and Thailand.

Company management stated, "We put a considerable amount of effort into improving product buying power patterns and as a result the composition and levels of inventory resulted in improved gross margins relative to a year ago.

Being slightly above the industry indicates that we could sell less of our inventory than what other companies in the industry would have to sell to meet current obligations. As Nike continues to expand in the global economy and increase its market throughout the world, these dispersed facilities will prove to be beneficial.

Though our facilities comply with local labor standards, generally, they have not met U.

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We want to be a leader and set a responsible corporate example for other businesses to follow. The fact that we are not leaders is ultimately a weakness. This proves to be a strength in that this method of research is less costly than basic research, and less risky due to the short-term nature.

Nike is not as leveraged as competitors in the industry and uses less debt financing to finance firm operations. Management of Accounts Receivable - Weakness Nike does permit sales in cash, cash equivalents and on credit.

However, at times we expanded into markets for which we were not strategically suited. Many new, innovative ideas come into existence as a result of basic, unspecific research. Applied research focuses on short-term initiatives such as successfully developing new product lines.

Had we anticipated the decline sooner, perhaps gradual changes could have been made so that the end result may not have been as finite in nature.Read this essay on Nike, Inc. Marketing Plan. Come browse our large digital warehouse of free sample essays.

NIKE, Inc. Executive Summary The cost of capital is the rate of return required by a capital provider in exchange for foregoing an investment in another project or business with similar risk. Thus, it is also known as an.

Executive Summary Kimi ford, a portfolio manager at NorthPoint Group, a mutual-fund management firm noticed that Nike’s share price had declined considerably from the start of the year - Nike Executive Summary introduction.

So Nike’s management held a meeting to try and figure out a new strategy to rejuvenate the firm. EXECUTIVE SUMMARY. Nike Inc. was founded in by Bill Bowerman and Phil Knight as a partnership under the name, Blue Ribbon Sports.

Our modest goal then was to distribute low-cost, high-quality Japanese athletic shoes to American consumers in an attempt to break Germany's domination of the domestic industry. Case Study: Nike, Inc.: Cost of Capital NorthPoint Large-Cap Fund manager Kimi Ford considering whether to buy Nike’s stock Nike has experienced decline in sales growth, profits and market share.

Executive summary. In this report we focus on Nike's Inc. Cost of Capital and its financial importance for the company and future investors. The management of Nike Inc. addresses issues both on top-line growth and operating performance/5(1). 9 Calculating cost of debt Once computed cost of equity capital, the next step envisages to estimate the Nike’s cost of debt.

From we first identify the Nike’s long term rating which is A1 as shown below.

Nike cost of capital executive summary
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