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Ratio analysis
The current ratio: The higher it is the better, it can pay short-term liabilities. Nike has improved from 2009 to 2010 from 2.97 to 3.26 – more current assets (12.59% change, because there is 48.94% increase in cash) and more current liabilities (2.66% change, because debt shows a positive change) as well but not as much as assets. In comparison to the industry average which is 1.25 and Adidas average (average over 4 years starting from fiscal year 2006) it has a much better current ratio. Puma is close with an average of 2.2 (average done over the fiscal years 2006-2010).
Quick ratio: The higher the quick ratio, the better the position of the company. It is much more exact since its not taking inventory into account. You can see that the most liquid asset, which is cash, increases 48.94% - 2.97 dollars of quick assets to meet 1 dollar of quick liabilities. Over the years it had a trend of increasing from 2006 to 2007 a decrease to 1.93 for 2008 and an increase to 2.65 in 2010. It outperforms by far the industry average (0.97), Adidas average (0.79) and Puma average …show more content…
Nike shows an improvement (79) on the last year comparing from 2006 to 2009 because they last fewer days to sell the entire inventory. Compared to competitors, Puma lasts 106 days and Adidas 80 days). Maybe its due to their marketing campaigns, a new production line, they might have changed their strategy.
Debt ratio: the lower the better (under 1) very important for creditors, to get a loan. Greater than one indicates that company has more debt than assets. Can be a measure of company’s risks. Nike has increased on a leverage point of view because from 2006 to 2010 it reduced its debt ration from 0.05 to 0.04 while its competitors like Puma has changed from 0.07 to 0.05 and Adidas as well has reduced it from 0.28 to 0.18. Like this we can see that all three companies are in a good position but Nike has a lower level of risk compared to the others as it has much more assets than …show more content…
High debt equity ratio, means company has been aggressive in financing its growth in dept, the lower the better. Nike is increasing and expanding as a business without having an increase in its debt. It has reduced it DTE from 0.07 to 0.06 maintaining its level of production and sales throughout the 5 years. Debt for Nike has increased from 2009 to 2010 by 2.39%. Compared with competitors like puma, which has a change on debt of 33.49% from 2009 to 2010, Nike is better of. In terms of equity, Nike has improved from 2009 to 2010 by 12,20% and from 2008 to 2009 by 11,9% while Adidas has only improved from 2008 to 2009 only 6.7% which means that Nike needs less proportion of debt and equity to finance its
The current ratio: The higher it is the better, it can pay short-term liabilities. Nike has improved from 2009 to 2010 from 2.97 to 3.26 – more current assets (12.59% change, because there is 48.94% increase in cash) and more current liabilities (2.66% change, because debt shows a positive change) as well but not as much as assets. In comparison to the industry average which is 1.25 and Adidas average (average over 4 years starting from fiscal year 2006) it has a much better current ratio. Puma is close with an average of 2.2 (average done over the fiscal years 2006-2010).
Quick ratio: The higher the quick ratio, the better the position of the company. It is much more exact since its not taking inventory into account. You can see that the most liquid asset, which is cash, increases 48.94% - 2.97 dollars of quick assets to meet 1 dollar of quick liabilities. Over the years it had a trend of increasing from 2006 to 2007 a decrease to 1.93 for 2008 and an increase to 2.65 in 2010. It outperforms by far the industry average (0.97), Adidas average (0.79) and Puma average …show more content…
Nike shows an improvement (79) on the last year comparing from 2006 to 2009 because they last fewer days to sell the entire inventory. Compared to competitors, Puma lasts 106 days and Adidas 80 days). Maybe its due to their marketing campaigns, a new production line, they might have changed their strategy.
Debt ratio: the lower the better (under 1) very important for creditors, to get a loan. Greater than one indicates that company has more debt than assets. Can be a measure of company’s risks. Nike has increased on a leverage point of view because from 2006 to 2010 it reduced its debt ration from 0.05 to 0.04 while its competitors like Puma has changed from 0.07 to 0.05 and Adidas as well has reduced it from 0.28 to 0.18. Like this we can see that all three companies are in a good position but Nike has a lower level of risk compared to the others as it has much more assets than …show more content…
High debt equity ratio, means company has been aggressive in financing its growth in dept, the lower the better. Nike is increasing and expanding as a business without having an increase in its debt. It has reduced it DTE from 0.07 to 0.06 maintaining its level of production and sales throughout the 5 years. Debt for Nike has increased from 2009 to 2010 by 2.39%. Compared with competitors like puma, which has a change on debt of 33.49% from 2009 to 2010, Nike is better of. In terms of equity, Nike has improved from 2009 to 2010 by 12,20% and from 2008 to 2009 by 11,9% while Adidas has only improved from 2008 to 2009 only 6.7% which means that Nike needs less proportion of debt and equity to finance its