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CONTENTS

CHAPTER 1 : INTRODUCTION
1.1 INTRODUCTION 1.2 SCOPE OF THE STUDY 1.3 OBJECTIVE OF THE STUDY 1.4 METHODOLOGY 1.5 LIMITATIONS 1.6 CHAPTERISATION CHAPTER 2 : PROFILE OF COMPANY 2.1 HISTORY OF NIKE 2.2 OPERATIONS OVERSEAS 2.3 COMPANY BACKGROUND 2.4 PRODUCT LAUNCHES 2.5 FOREIGN OPERATION 2.6 MANUFACTURING FACILITIES

CHAPTER 3 : ANALYSIS AND INTERPRETATION 3.1 BALANCE SHEET & P/L A/C 3.2 DEALERS NETWORK

3.3 Liquidity Indicators 3.4 RATIO ANALYSIS

CHAPTER 4 : CONCLUSION
4.1 FINDINGS 4.2 SUGGESTION 4.3 AWARDS & RECOGNITIONS

BIBLIOGRAPHY

CHAPTER 1 INTRODUCTION

1.1 INTRODUCTION
The athletic footwear industry is a highly competitive environment where the top four manufacturers hold over 70% of the market share. The barriers to entry into the industry are comparatively low, as anyone with new creative design ideas can produce and market their product, but the success of smaller companies is oftentimes shaky. Brand loyalty, ample capital, and broad based sourcing create an environment where the bigger companies such as Nike and Reebok have little trouble maintaining market share. Nike enjoys the largest share, with 42.3% of the nearly $8 billion market in the year 2000. Reebok was second with 11.9%, Adidas had 10.8%, and New Balance had 9.6% of the market. The remaining 25% must be divided among the numerous smaller companies fighting for a shot at survival. NIKE Corporation was incorporated in 1968. NIKE has primarily been in the business of designing, developing, and marketing athletic footwear, apparel, equipment and accessories. NIKE Corporation is a well managed company in an attractive industry, the company has a strong brand image, and they are effectively capturing the value created from their investment. NIKE is dependent upon high technology in their effort to stay ahead of their competitors and produce products. ucts and machines that actually make the shoes. Its success had been fueled by the use of low wage labor in developing countries, accompanied by highly acclaimed marketing strategies and advertising campaigns.

Key factors that influence success of NIKE

If a company is able to establish brand awareness, they will have a significant advantage in grabbing consumer's attention and, therefore, market share. In today's society where consumers have significantly less time to shop and compare, brand awareness is critical. If an established brand name effectively conveys the messages of quality and dependability, consumers will automatically go to that brand relying on the image that has been created when they don't have time to shop around. Manufacturing efficiency is something that companies are constantly striving for as well. Athletic shoe manufacturers must balance the costs of labor, raw materials, shipping, import tariffs, and technological advancements. In an effort to keeps costs down, the industry has been looking to overseas sourcing. This reduces the risk of losing revenue if one region which a manufacturer incurs problems. Favorable legislation regarding foreign manufacturing has led to a huge increase in foreign sourcing. Overseas production and sourcing can lower material, and labor costs. 1.2 SCOPE OF THE STUDY

The present study is concentrated on the need, importance and responsiveness of working capital finance on the public sector steel industry of India. Specifically, NIKE Inc. has been chosen, is an integrated public sector fertilizer plant of the country. However, to make the study more result oriented and facilitating comparison at times, the information relating to other public sector as well as private fertilizer plants is referred .It is pertinent to note that, the PPL so selected for the study will be representative in character and throw some light for the other units of the industry. The scope of working capital finance in varies wide and broad based. It encompasses within its fold the entire business operation. For, theoretical understanding definition of working capital needs, types, sources, factors, theory of financing, bank financing , committee reports come under the purview of present study along with type of decision involved in working capital financing .For analytical and technical study, tools and techniques such as funds flow statement , ratio analysis , permissible bank finance and their interpretation are included for the study.

1.3 OBJECTIVE OF THE STUDY In the above back drop, the following objectives have been designed for the systematic study. 1. 2. 3. 4. 5. To give a clear idea on the theoretical framework of financial position . To examine the structure and sources of companys fund. To study the trends in financing working capital To ensure a tradeoff between profitability and liquidity To assess the impact of working capital finance under study.

6. To analyze and interpret the responsiveness of working capital finance during the period of the study. 7. To evaluate the cost consciousness and financial performance of the unit for the period under consideration. 8. To suggest some remedial measures if any to improve the overall performances. 1.4 METHODOLOGY In order to draw some valuable conclusions it is decided to adopt appropriate statistical techniques and principles at different parts of the work. The present study covers six years, 2006-07 to 2009-10. The data so collected have been analyzed with the help of different statistical tools like percentage analysis, ratio analysis, averages , standard deviations, co-efficient of correlation, regression analysis etc. .Diagrammatic and graphic presentations are used in financial analysis. 1.5 LIMITATIONS The present study is mainly based on the secondary data as published by the NIKE Inc. .The study safely depends on the financial data obtained from annual accounts of NIKE Inc. for a period of only six years, 2006-07 to 2009-10.

The data collected from the above sources are not of detailed nature. The limitation of techniques used for analyze could not be avoided and the impact of the limitation is felt well in the study. Hence, after proper investigation the result may be used for any purpose. 1.8 CHAPTERISATION In the project we have discussed on several points to find out proper financial position of the company NIKE Inc. It contains all matter of financial analysis, ratio,

CHAPTER 2 PROFILE OF COMPANY

2.1 HISTORY OF NIKE NIKE Corporation was incorporated in 1968. NIKE has primarily been in the business of designing, developing, and marketing athletic footwear, apparel, equipment and accessories. NIKE Corporation is a wellmanaged company in an attractive industry, the company has a strong brand image, and they are effectively capturing the value created from their investment. NIKE is dependent upon high technology in their effort to stay ahead of their competitors and produce products. ucts and machines that actually make the shoes. Its success had been fueled by the use of low wage labor in developing countries, accompanied by highly acclaimed marketing strategies and advertising campaigns. Key factors that influence success of NIKE. If a company is able to establish brand awareness, they will have a significant advantage in grabbing consumer's attention and, therefore, market share. In today's society where consumers have significantly less time to shop and compare, brand awareness is critical. If an established brand name effectively conveys the messages of quality and dependability,

consumers will automatically go to that brand relying on the image that has been created when they don't have time to shop around. History: 1957: Phil Knight and Bill Bowerman meet at the University of Oregon 1962: Phil Knight and Bill Bowerman founded Blue Ribbon Sports with the purpose of making quality American shoes and started out by selling their shoes from a car at the side of tracks to athletes and people who are interested. 1963: Sold shoes from a manufacturer in Japan called Onitsuka Tiger 1972: Name changed to NIKE Inc, which was derived from the Greek goddess of ironically paid only $35 for her design. The team also convinced marathon runners at Olympic Trails to wear NIKE shoes and this resulted in strong advertising especially when several runners were some of the top finishers. Popularity continued to grow throughout the 70s . 1979: By this time NIKE had 50% of the US running shoe market 1980: NIKE goes public . 1988: Famous slogan Just do it introduced and company acquired Cole Haan. Throughout its existence, NIKE endorsed and sponsored different athletes like Michael Jordan the famous basketball player or Tiger Woods the young outstanding golf player.

1995: NIKE acquired a license to place its logo on NFL uniforms. 1992: Opens it first NIKETOWN store and a few years later, it acquired Canstar Sports, which included hockey equipment maker Bauer. 1997: NIKE launched the Jordan brand of athletic shoes and sportswear. 1998: the company had to cut 1,200 jobs because of falling sales in Asia 1999: demands for athletic shoes decreased in 1999, and NIKE declared its first drop in sales since 1994. Bowerman dies and as recognition for his achievements. 2000: NIKE shifts a little more towards the electronic and technological sector and and historical impact on the industry, NIKE released a line of running shoes in his honor introduced a line of athletic electronics, including MP3 players, heart monitors, and two-way radios, which are always useful to athletes. 2001: The Company opened its first NIKEgoddess store in California 2002: Acquired Hurley International, a distributor of action sports apparel and Reebok takes Nikes place and acquires a license to place its logo on NFL uniforms

2003: NIKE acquired competitor Converse but left it as a separate operating company for the purpose of not loosing the brands popular name .

2.2 OPERATIONS OVERSEAS


Manufacturing efficiency is something that companies are constantly striving for as well. Athletic shoe manufacturers must balance the costs of labor, raw materials, shipping, import tariffs, and technological advancements. In an effort to keeps costs down, the industry has been looking to overseas sourcing. This reduces the risk of losing revenue if one region which a manufacturer incurs problems. Favorable legislation regarding foreign manufacturing has led to a huge increase in foreign sourcing. Overseas production and sourcing can lower material, and labor costs. The footwear companies must choose their distribution channels carefully because they want to make the product available, yet remain true to their image and goals. Retailers account for the largest percentage of sales, so manufacturers must be especially careful with their relationships with them. Technological advancement is becoming more and more of a player in the footwear industry. With computer-aided design (CAD), companies have been able to successfully shorten their design to distribution cycle to only a few months. Also, new technology has facilitated new quick-response programs that link retailers with manufacturers to allow the retailer to have the correct inventory when it is needed called electronic data interchange

(EDI). Immediately after a sale is made, electronic point of sale scanners read the information related to the sale such as price, product, size, etc. and notify the manufacturer of the sale. With this, the manufacturer is able to accurately modify production to fit consumer demand.

2.3 COMPANY BACKGROUND


The athletic footwear industry is a highly competitive environment where the top four manufacturers hold over 70% of the market share. The barriers to entry into the industry are comparatively low, as anyone with new creative design ideas can produce and market their product, but the success of smaller companies is oftentimes shaky. Brand loyalty, ample capital, and broad based sourcing create an environment where the bigger companies such as Nike and Reebok have little trouble maintaining market share. Nike enjoys the largest share, with 42.3% of the nearly $8 billion market in the year 2000. Reebok was second with 11.9%, Adidas had 10.8%, and New Balance had 9.6% of the market. The remaining 25% must be divided among the numerous smaller companies fighting for a shot at survival. NIKE has always been an industry leader when it comes to advertising. Their advertising campaigns are known all over the world as being widely successful. NIKE is truly a trendsetter when it comes to advertising, not just for shoes, but for the advertising industry as well. The company was all about the clarity of matching technology to athletic performance-and, in the ads, showing the passion that resulted. By going against the norms in advertising, NIKE was able to distance itself from other shoe

makers and thus establish strong customer core. NIKE is the leading company of sports goods (shoes, garments, accessories) and one of the most recognizedbrands in the world. It ranks as number 9 in the Top 100 Multinational Companies (see Far Eastern Economic Review 2003).

2.4 PRODUCT LAUNCHES The Company creates designs for men, women and children. Running, basketball, children's, cross-training and women's shoes are the Company's top-selling product categories. NIKE also markets shoes designed for outdoor activities, tennis, golf, soccer, baseball, football, bicycling, volleyball, wrestling, cheerleading, aquatic activities, hiking and other athletic and recreational uses. NIKE sells active sports apparel that covers most of the categories mentioned, athletically inspired lifestyle apparel, as well as athletic bags and accessory items. NIKE apparel and accessories are designed to complement its athletic footwear products, feature the same trademarks and are sold through the same marketing and distribution channels. The Company often markets footwear, apparel and accessories in collections of similar design or for specific purposes. NIKE also markets apparel with licensed college and professional team and league logos. It sells a line of performance equipment under the NIKE brand name, including sport balls, timepieces, eyewear, skates, bats, gloves and other equipment designed for sports activities. The Company also has agreements for licensees to produce and sell NIKE brand swimwear, women's sports bras, cycling apparel, maternity exercise wear, children's clothing, school supplies, timepieces and electronic media devices. The Company also sells small amounts of various plastic products to other manufacturers through its wholly owned subsidiary, NIKE IHM, Inc. and plastic injected and metal products to other manufacturers through its wholly owned subsidiary, BAUER Italia S.p.A.

NIKE has recently started offering customers the option of customizing their own sneakers by allowing them choices in areas such as color, and design and even allows customers to put their names on sneakers. Dress and casual footwear, apparel and accessories for men and women under the brand names Cole Haan, CH, Gseries by Cole Haan and Bragano are sold by the Company through its wholly owned subsidiary, Cole Haan Holdings, Inc., headquartered in Yarmouth, Maine. NIKE's wholly owned subsidiary, Bauer NIKE Hockey Inc., manufactures and distributes ice skates, skate blades, in-line roller skates, protective gear, hockey sticks and hockey jerseys, licensed apparel and accessories under the Bauer and NIKE brand names. Bauer also offers a full selection of products for street and roller hockey. The Company's wholly owned subsidiary, Hurley International LLC, headquartered in Costa Mesa, California, designs and distributes a line of action sports apparel (for surfing, skateboarding and snowboarding) and youth lifestyle apparel and footwear under the Hurley brand name. On July 9, 2003, NIKE entered into an agreement to purchase all of the equity shares of Converse Inc., afootwear company based in Massachusetts. Closing of the transaction is subject to regulatory review, including U.S government review under the Hart-ScottRodino Premerger Notification Act. 2.5 FOREIGN OPERATION Australia (23 March 2004) - The Australian Soccer Association (ASA) announced today that it has formed a significant new partnership with Nike, which will have a positive impact on the future of soccer in Australia. As the new official supplier of apparel, footwear and ball to ASA, Nike will provide all the national soccer teams with the most innovative product on the market.Affect and Opportunity: Partnerships and alliances are always a good move but when fostered with national teams these partnerships highlight strong indicators for increases support and sales especially when these alliances are garnered with countrys serious about sports. This not only applies for competitions like the World Cup but also the upcoming Olympics. Supporters of athletes can also translate into supports of NIKE. Philip H. Knight, Chairman and Chief Executive Officer said, It was another great quarter for Nike. Top and bottom line results were again driven by healthy consumer demand for innovative products and the strength of Nikes

diverse portfolio of businesses. For the first nine months of the year, Nikes revenue has grown 14 percent and earnings per share* are up 29 percent. As we look ahead, we are optimistic about the significant long-term growth opportunities for our company. In a call to investors, Nike Co-President Mark Parker cited the continued improvement in the U.S. footwear industry, along with the returning popularity of $100-plus sneakers. "If the results of our past quarter are any indication, this could be a watershed year for Nike," Mr. Parker said, adding, "We've just posted the most-successful third quarter with respect to revenues and gross margins in our company's 32-year history Our revenues are strong, our gross margins are trending up and our average price per pair is increasing." Supplier diversity is a very important part of a successful business and it holds several key aspects. It is about understanding the importance of consumers and satisfying their needs. However, since NIKEs customers are on a worldwide scale, the company needs as broad a base of suppliers as possible to actively and significantly reflect the world in which it operates. NIKE relies heavily on its supplier relationships to help the company arrive at innovative and creative solutions, to understand its business, and to help it reach its goals. Furthermore, with such a large and diverse supplier base, NIKE is able to have a strong presence in the markets it operates, and it has a solid brand name that is recognizable worldwide, with strong credibility. 2.5.1 Threat of Substitutes A threat of substitutes is highlighted with the ability to replace the companys existing products with one of its competitors or other industries. When a products demand is affected by the price changes of substitute products, the company ought to adjust its prices by reducing manufacturing costs or other unnecessary costs. However, in the case of NIKE, the company is to some extent able to keep its prices higher than other competitors because of its recognizable brand name, and its customer loyalty that it heavily depends on. The threat of substitutes is also affected by the cost of supplies that are used for manufacturing. Again, we see that NIKE is able to keep those costs lower than other competitors because of its good supplier relationships, its low default risk, and its continuous productivity all year long for all seasons. In terms of fear of the buyer inclination to substitute, NIKE is less affected than

other companies because of its product quality, brand recognition, and geographic diversification. NIKE products are distributed on all continents and target different age groups. NIKE Inc. is a well-established company, with quality products, at very competitive prices. The latter qualities dramatically decrease the threat of substitutes for its products.

2.5.2 Buyer Power The power of buyers in the footwear industry is distributed among several companies. Even though the number of buyers is around 25 companies, there are a small number of them that control the market.

2.6.3Market Capitalization NIKE 20.21B Reebok 2.46B Timberland 2.08B Sketchers 489.02M Adidas* n/a

* Data for Adidas-Salomon AG is not available. Being a very large corporation with a very large consumer base, NIKE is able to acquire other competitors or producing firms. NIKE joined with some great partners over the years to extend and improve its products quality, variety and efficiency. Some of those companies include: Cole Haan, Bauer, Hurley International, and Converse. Because of its rigorously established situation in the markets it operates, the company is also able to control its supplies by increasing the number of suppliers and therefore increasing competition and lowering costs. NIKE designs, manufactures, and markets a much diversified portfolio of products which includes footwear, clothing, sports accessories, and other equipment for almost every existing type of sport. This characteristic gives NIKE an advantage over other sports companies that carry a smaller product line by limiting their control over the market and product diversification, which essentially increases the possibility of default.

2.6 MANUFACTURING FACILITIES Footwear manufacturers and retailers will continue to attract customers by introducing new lines of products and brand diversification. While NIKE and REEBOK are expected to drive most of the footwear industrys sales, casual shoe companies, especially those that manufacture lower-priced hybrid shoes (a combination of casual and athletic shoes), will gain more customer acceptance and share a small percentage of the market with the top footwear manufacturers. Finally, the 2004 Summer Olympics in Athens, Greece, will be a great opportunity for the major athletic footwear manufacturers to market their products and increase sales.The footwear industry and NIKE Inc. are both at the maturity stage in terms of life cycle. A maturity stage, however, does not mean that NIKEs profit growth is at a zero level. Rather, the company generates stable sales and its profits increase with new management strategies, new product lines, expansion into new markets, and continued demand for its premium footwear products. Standard & Poors forecasts that the footwear industry will continue to face a highly competitive but improving environment. S&P also anticipates a modest gain in sales for the footwear industry in 2004. Positive economic growth, a higher consumer price index, increased consumer spending, and higher consumer confidence strengthens Standard & Poors forecast that footwear sales will experience a moderate increase in sales in the forthcoming years.However, the horizon for the athletic footwear segment has been and continues to be favorable. Based on SGMA Internationals (a trade group for sporting goods companies) findings, unit sales of athletic footwear increased by 4.9% due to a stronger second half in 2003. Consumer spending on athletic footwear has also rose by 4.5% in 2003. Standard & Poors estimated that these increases equaled to about 450 million pairs of athletic shoes purchased by US consumers at a total cost of about $16.5 billion in 2010. Nevertheless, a market research firm, the NPD Group, also found out that although consumer purchases of athletic footwear increased for the past few years, the average price they paid per pair also dropped. Specifically, the average price per pair in 2001 was $38.20, but in 2002 it dropped 4.2% to $36.61.

CHAPTER 3 ANALYSIS AND INTERPRETATION

3.1. BALANCE SHEET & P/L A/C Balance Sheet

Assets

2011

2010

2009

2008

2007

Cash & Short Term Investments Receivables Inventory Prepaid Expenses Other Current Assets Total Current Assets Gross Property, Plant & Equipment Accumulated Depreciation Net Property, Plant & Equipment Long Term Investments Goodwill & Intangibles Other Long Term Assets Total Long Term Assets Total Assets
Liabilities Current Portion of Term Debt Accounts Payable Accrued Expenses Deferred Revenues

4.538B 3.138B 2.715B 594.0M 11.30B 4.906B 2.791B 2.115B

5.146B 2.65B 2.041B 873.0M 10.96B 4.39B 2.458B 1.932B

3.455B 2.884B 2.357B 765.6M 9.734B 4.256B 2.298B 1.958B

2.776B 2.795B 2.438B 602.3M 8.839B 4.103B 2.212B 1.891B

2.847B 2.495B 2.122B 393.2M 8.076B 3.619B 1.941B 1.678B

692.0M 3.701B 15.00B


2011

655.0M 3.46B 14.42B


2010

660.9M 3.516B 13.25B


2009

1.192B 3.603B 12.44B


2008

540.7M 2.612B 10.69B


2007

Long 200.0M 1.469B 1.985B

7.0M 1.255B 1.904B

32.0M 1.032B 1.784B

6.3M 1.288B 1.762B

30.5M 1.040B 1.303B

Other Current Liabilities Total Current Liabilities Total Long Term Debt
Shareholder's Equity Deferred Income Tax Minority Interest Other Long Term Liabilities Total Long Term Liabilities Total Liabilities Common Shares Outstanding Preferred Stock Common Stock, Net Additional Paid-in Capital Retained Earnings Treasury Stock Other Shareholder's Equity Shareholder's Equity Total Liabilities & Shareholder's Equity

3.958B 276.0M
2011

3.364B 446.0M
2010

3.277B 437.2M
2009

3.322B 441.1M
2008

2.584B 409.9M
2007

921.0M

855.0M

842.0M

854.5M

668.7M

1.197B 5.155B 468.0M

1.301B 4.665B 484.0M

1.280B 4.556B 485.5M

1.296B 4.617B 491.1M

1.079B 3.663B 501.7M

3.0M 3.944B 5.801B

3.0M 3.441B 6.095B

2.8M 2.871B 5.451B

2.8M 2.498B 5.073B

2.8M 1.96B 4.885B

9.843B 15.00B

9.754B 14.42B

8.693B 13.25B

7.825B 12.44B

7.025B 10.69B

Interpretation i. The net block of MSI have increased over the years. It means the company has invested in long term assets to fuel its productions. ii. The debtors of the company have increased which indicates that the company has achieved sales targets. The turnover of debtors has also been very good. iii. Total current assets indicate that the liquidity position of the company has been impressive over the years. The company has also maintained sufficient cash balances. iv. Shareholders funds have increased which indicate that the net profit of the company has also increased.

v. The total long-term debts of the company have increased which indicate that the company has used outside funds for its operations. But however, the debt equity ratio has been acceptable.

PROFIT & LOSS A/C


Particular Income Sales Other Income Increase/Decrease in stocks Total Income Expenditure Total Expenditure Operating Profit Interest Gross Profit Depreciation Profit Before Tax Provision for Tax Deferred Tax Fringe Benefit Tax Net Profit Adjustments Below Net Profit Statutory Appropriations Profit & Loss Brought Forward Appropriations Profit & Loss Carried Forward EPS (in Rs) Book Value (in Rs) Preference Dividend (in Rs) Equity Dividend in % Equity Dividend in (Rs.) Corporate Dividend Tax Contingent Liability 2011/03 25531.23 628.20 202.92 26362.35 22358.02 4004.33 70.86 3933.47 413.86 3519.61 761.67 95.84 0.00 2662.10 0.00 0.00 4588.37 1041.93 6208.54 45.33 174.86 0.00 230.00 706.08 96.56 2693.61 2010/03 20377.15 438.37 10.40 20825.92 17451.54 3374.38 156.85 3217.53 370.78 2846.75 749.33 9.67 0.00 2087.75 0.00 0.00 3365.32 864.70 4588.37 36.89 137.96 0.00 190.00 549.52 74.23 2359.95 2009/03 14686.04 428.76 -123.99 14990.81 13497.98 1492.83 134.12 1358.71 291.51 1067.20 58.51 141.18 0.00 867.51 -4.07 0.00 2935.42 441.68 3365.32 31.82 192.34 0.00 100.00 278.83 33.23 1627.76 2008/03 13079.02 425.82 130.93 13635.77 11902.75 1733.02 87.59 1645.43 238.66 1406.77 278.75 24.65 0.00 1103.37 0.00 0.00 2125.08 452.97 2775.48 46.15 181.27 0.00 115.00 282.61 38.48 1001.46 2007/03 11183.50 583.76 8.55 11775.81 10127.93 1647.88 19.80 1628.08 209.59 1418.49 365.73 -15.63 0.00 1068.39 0.00 0.00 1475.74 419.05 2125.08 44.88 148.59 0.00 115.00 282.23 42.50 726.47

Extra-Ordinary Items Source: Powered by Tickerplant

148.79

80.32

62.30

191.32

106.69

Interpretation i. The sales revenue of the company has increased almost above 200 % over the last five years. It means there have been some sale promotions. ii. The position of stock became negative in 2009. But, after that the company has been able to maintain its stock to meet the gap between the demand & supply. iii. The total expenditure of the company has also increased about almost 220 % over the last five years. So the sales of the company have increased. iv. The gross profit of the company though decreases in 2009 but after that it has increased over 10% of sales. v. The net profit of the company first increases for 2 years but decreases in 2009 & then increases.

DEALERS NETWORK

Another factor in the form of US Personal Consumption Expenditures (PCE) indicates an improvement in the US economy. During 2002 and 2003, PCE was stable as compared with the other components that measure the US economy. Nevertheless, in the fourth (4) quarter of 2003, PCE rose 2.6% and closed out at a 3.1% growth by the end of the year. According to Standard & Poors projections, the personal consumption expenditures will rise to 3.4% in 2004, which will increase companies optimism in general. Standard & Poors estimates suggest that in the Footwear industry, NIKE remains by far the largest footwear manufacturer. For the year ended 2003, NIKE generated $10.7 billion in total revenue, while ADIDAS-SOLOMON and REEBOK generated

2.8 billion and $3.1 billion in total revenue respectively. Other major footwear manufacturers include FILA USA Inc., PUMA, TIMBERLAND Co., SKECHERS USA Inc., and others.

Chart 1-1

* Data for ADIDAS-SOLOMON

Chart 1-1 presents the daily comparison of the top footwear manufacturers stock performance over the past year. The analysis of this chart shows that for the most part, all competitors had the same stock price trend. NIKE, however,

has been steadily outperforming all of its major competitors, except SKECHERS, which outperformed NIKE for the last few moths of 2004. Nevertheless, a closer look reveals that SKECHERS has had the most fluctuating stock price performance than any other major sports conglomerate; therefore, making it a very risky stock. NIKE on the other hand has a steady, upward growth in relation to its competitors (as seen in Chart 1-1) and the S&P 500 index (refer to Technical Analysis).

4.3Liquidity Indicators

Curre nt Ratio Quick 1.44 Ratio Total 0.19 Debt to equity

5/31/20 10 2.32

5/31/20 09 2.26

5/31/20 08 2.03

5/31/2007 1.68

5/31/1996 2.26

1.37 0.18

1.14 0.13

0.90 1.70

1.3 .

NIKEs liquidity fell between 1999 and 2000 by 25.66% but the company was still able to meet its short-term obligations with its current assets. After 2000 the companys liquidity then steadily increased from 2000 to 2003 to highlight an overall increase in liquidity of 2.65%. The quick ratio also highlights a similar movement in liquidity. Liquidity dropped between 1999 and 2000 by 30.77% but then the company steadily improved its liquidity

throughout the following years to result in an overall increase in liquidity of 10.77% as represented by the quick ratio. In terms of the ratio of debt to equity in financing between 1999 and 2000 NIKE showed an increase in debt in its financing as compared to equity but then in 2000 the company showed a reversal in its position with more reliance on equity compared to debt. 2001 to 2003 showed an increased use of debt compared to equity in NIKEs capital structure and therefore showed NIKE to be more leveraged at the end of 2003.

4.8. RATIO ANALYSIS

5/31/2010

5/31/2009

5/31/2008

5/31/2007

5/31/2006

Return onEquity 18.55 Return on Assets 11.02 OperatingMargin 11.65

17.41 10.37 10.79

16.88 10.13 10.69

18.47 9.89 10.95

13.54 8.60 9.76

NIKEs Return on Equity rose 36.41% between 1999 and 2000, while a shaky position between 2000 and 2001 resulted in a fall in the return on equity gained from the previous year by 8.61% to stand at 16.88 in 2001. This position was reversed in the following two years with return on equity rising by 3.14% between 2001 and 2002 and then 6.54% between 2002 and 2003. Return on Assets steadily increased for NIKE from the period from 1999 to 2003 with an overall increase of 28.14% showing that NIKE continuously earned more returns on the employment of its assets throughout the years. Operating Margin also steadily grew from 1999 to 2003 with a slight drop by 2.37% in

2001 but then rose again by 0.94% and then 7.97% resulting in an overall increase in operating margin from 1999 to 2003 of 19.36%.

NIKE Current Ratio Quick Ratio Total Debt/Equity 2.32 1.44 0.19

REEBOK 3.05 2.17 0.34

ADIDAS 2.07 1.20 0.70

INDUSTRY 2.82 1.80 0.27

OTHER 1.43 1.00 1.41

Liquidity Ratios: Liquidity is a measure of a companys ability to meet its shortterm obligations. A liquid asset is one that can be quickly converted into cash. Liquidity ratios express the variability of liquid resources relative to potential claims. Current Ratio: With this current ratio, Nike is able to cover its current liabilities 2.32 times with its current assets. Reeboks ratio is slightly higher at 3.05 and Adidas is slightly lower at 2.07. In comparison the industry is more liquid than Nike and the market is less liquid. Focusing on its main competitors in the form of Reebok and Adidas, Nikes liquidity is at a viable position and the higher liquidity of Reebok and the industry may mean that other companies are leaving its cash idle and not using it to its full potential. Quick/Acid Test Ratio: This means that with the exclusion of its most illiquid asset in the form of inventory, Nike is still able to cover its current liabilities. The industry to which NIKE belongs is more liquid with ADIDAS being less liquid than NIKE and REEBOK being even more liquid than industry. The market as a whole stands at a more balanced position with a 1 to 1 ratio. Leverage Ratios: A leveraged company uses more debt than equity including stock and retained earnings in its capital structure. Debt-to-Equity: Nikes debt-to-equity ratio of 0.19 shows that Nike uses more equity in its financing than debt and is therefore not highly leveraged. Reebok and Adidas are more leveraged but the industry as a whole shows capital that weigh more on the equity side with a figure of 0.27 but still more leveraged

than Nike. The market as a whole however is highly leveraged represented by a figure of 1.41, which shows that debt, outweighs equity in capital structure. Inventory Turnover: This means that NIKE turned over its entire inventory 7.06 times. As long as a company is not running out of stock and thereby foregoing sales, the higher this ratio is the more efficiently inventory is being managed. Inventory turnover for REEBOK and ADIDAS is 9.89 and 5.38 times respectively. This highlights that REEBOK turns over its inventory much faster than NIKE and the industry as a whole. The industry position is much lower at 3.70 and the market turns over its inventory faster than the industry with a figure of 7.60. Even though NIKE is less liquid than its closest competitor REEBOK this can be accounted for by NIKEs wider and more extensive range of products in comparison to REEBOK and other competitors. Asset Turnover: Measures how efficiently a company uses its assets to generate sales. NIKE uses its assets to generate sales better than ADIDAS, the industry as a whole and much better than the market. REEBOK however utilizes its assets to generate sales approximately 10% better than NIKE does. Average Collection Period: Highlights how effective the companys credit, billing, and collection procedures are. This shows that it takes NIKE approximately 61.59 days to receive its cash after making a sale. REEBOK and the industry take 6.61 and 8.64 days less to receive its cash after making a sale. The market takes 5.6 days more than the industry but takes 3.04 days less than NIKE to receive its cash.Profitability Ratios: These ratios measure the efficiency with which a company uses its resources and the more efficient a company is the higher its profitability. A number of different ratios can be used to assess different aspects of profitability in relation to a companys performance. Gross Profit Margin: This calculation represents the amount of each dollar of revenue that results in Gross Profit. Approximately forty-one percent of NIKEs revenues result on gross profit, Reeboks figure is slightly less at 38.40% with ADIDAS, the industry and the market reaping higher results. Net Profit Margin: This represents the amount of each dollar of revenue that results in Total Net Income. NIKE realizes a higher percentage of its revenue in total net income compared to its main competitors, the industry and the market, with a net profit margin of 7.55%. This turnaround between the

positionsrealized with the gross profit margin suggests that NIKE manages its expenses better than the other groups with which it is compared.

CHAPTER 4 CONCLUSION

5.1 FINDINGS
According to an analysis on Beyond Corporate Codes of Conduct: Work Organization and Labor Standards in Two Mexican Garment Factories, global brands are more likely to influence the improvement of working conditions in their suppliers factories in developing countries by providing technical assistance to suppliers and empowering employees on shop floors. These are the findings of Richard Locke, the Alvin J. Siteman Professor of Entrepreneurship at MIT Sloan, and his former student Monica Romis, who compared working conditions in two Mexican garment factories that supply athletic footwear and apparel giant Nike, Inc. Both Mexican factories passed compliance according to Nikes code of conduct, but only one factory earned high scores in overall employee satisfaction with workplace conditions. This is a factor that is most interesting to those of us who are trying to find out more about global justice. What was the real difference between the two factories? Why were the workers of one factory more satisfied with their working conditions compared to the workers of the other factory? The key difference, according to Locke, is that the factory with the higher satisfaction scores implemented lean manufacturing processes a term referring to manufacturing methods based on maximizing value and minimizing waste in the manufacturing process that resulted in employees having greater autonomy and power to make day-to-day decisions on the shop floor. In simple English, this process

involves greater say-so of employees in the factories. Such power gave the workers a greater sense of satisfaction. The following is excerpted from the research: Both factories complied with Nikes requirements, but employee satisfaction surveys showed considerable differences in workers satisfaction. The first Mexican company, which Locke and Romis refer to as Plant A, is situated in an industrial park and has been owned by a Mexican family for more than 50 years. The second factory, Plant B, is part of a Taiwanese group. In January 2001 Nike made public the PricewaterhouseCoopers report for a fac-tory in the Dominican Republic. The auditors noted that According to the 25 inter-viewed employees, management does not accept that employees create or join a union.In its response to the report Nike rejected the testimony of the 25 workers, claiming.

5.2 SUGGESTION
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. The company's cost of capital is a critical element in such decisions and it is important to estimate precisely the weighted average cost of capital (WACC). In our analysis, we examine why WACC is important in decision making and we show how WACC for Nike Inc. is calculated correctly. Also, we calculate the company's cost of equity using three different models: the Capital Asset Pricing Model (CAPM), the Dividend Discount Model (DDM) and the Earnings Capitalization Model (EPS/ Price), we analyze their advantages and disadvantages and finally we conclude whether or not an investment in Nike is recommended. Over the past half century, the international flow of goods, services, and capital has grown rapidly. Globalization creates new economic, cultural, and social opportunities, but also poses the challenge of ensuring that workers throughout the world share in these opportunities. Multi-National Corporations are investing in developing countries in order to exploit the new opportunities for division of labor on a global scale. This essay will examine & analyze the labor practice in Nikes footwear and apparel factories in developing countries. In the mid1990s Nike, one of the world's most successful footwear companies is hit by a spate of alarmingly bad publicity. After years of high-profile media

attention as the company that can "just do it," Nike is suddenly being portrayed as a firm that relies on low-cost, exploited labor in its overseas plants.

5.3 AWARDS & RECOGNITIONS


Nike has earned the Emmy Award for best commercial twice since the award was first created in the 1990s. The first was for "The Morning After," a satirical look at what a runner might face on the morning of January 1, 2000 if every dire prediction about the Y2K problem came to fruition.[41] The second was for a 2002 spot called "Move," which featured a series of famous and everyday athletes in a variety of athletic pursuits In 1982, Nike aired its first national television ads, created by newly formed ad agency Wieden+Kennedy (W+K), during the broadcast of the New York Marathon. This was the beginning of a successful partnership between Nike and W+K that remains intact today. The Cannes Advertising Festival has named Nike its Advertiser of the Year in 1994 and 2003, making it the first and only company to receive that honor twice. It is the world's leading supplier ofathletic shoes and apparel[3] and a major manufacturer of sports equipment, with revenue in excess of US$18.6 billion in its fiscal year 2008 (ending May 31, 2008). As of 2008, it employed more than 30,000 people worldwide. Nike and Precision Castparts are the only Fortune 500companies headquartered in the state of Oregon, according to The Oregonian

BIBLIOGRAPHY
A. WEBSITES
1. www.wikipedia.com 2. www.google.com 3. www.scribd.com 4. www.moneycontrol.com 5. www.sulekha.com 6. www.prokerla.com 7. www.bharatbook.com 8. www.tata.com

B. JOURNALS, PERIODICALS & NEWS PAPERRS.

1. Business Standard 2. Economic and Political Weekly. 3. Economic Times. 4. Financial Express 5. Indian Express. 6. Indian Economic Journal