American multinational corporation

post carries three assignments

The company, their industry, and their primary competitors.

Nike, Inc. is an American multinational corporation which is headquartered near Beaverton, Oregon, in the Portland metropolitan area. The company is engaged in the design, development, manufacturing, and worldwide marketing and sales of footwear, apparel, equipment, accessories, and services. The company is alsoknown for being one of the world’s largest suppliers of athletic shoes and apparel and a major manufacturer of sports equipment. The industry of this footwear manufacturing company is Apparel, accessories, Sports Equipment industry. The top two Nike competitors are Adidas and Reebok but apart from these two, there are many others in the sports footwear market as well.(About.nike.com, 2017)

b. Prepare a two to three paragraph introduction that explains your company’s background, where they are in the industry (oldest, largest, 10th largest, etc.), and what they do.
This company was founded on January 25, 1964, as Blue Ribbon Sports, by Bill Bowerman and Phil Knight. Initially, the company operated as a distributor for Japanese shoe maker Onitsuka Tiger (which is now ASICS), thus making most sales at track meets out of Knight’s automobile. It officially became Nike, Inc. on May 30, 1971.
The company produces a wide range of sports equipment and is one of the world’s largest suppliers of athletic shoes and apparel and is a major manufacturer of sports equipment in this industry. The first product of the company were track running shoes. Currently, it is also making shoes, jerseys, shorts,baselayers and cleats, etc. for a wide range of sports products that include track and field, baseball, ice hockey, tennis, association football (soccer), lacrosse, basketball, and cricket.Nike sells an assortment of products, including shoes and apparel for sports various activities for men and women. It also sells shoes for outdoor activities such as tennis, golf, skateboarding, association footballand other athletic and recreational uses.Although NIKE’s athletic footwear products are designed primarily for specific athletic use, but is also used for casual or leisure purposes.(About.nike.com, 2017)

c. Describe their primary risk factors. This list can be pages long. Please limit to the two or three that you think are the largest risks.
The primary risk factors for Nike are many. First risk factor is that NIKE is a consumer products company which is why the relative popularity of varioussports and fitness activities can affect the demand forproducts along with changing design trends in market. This industry is highly competitive and the company has to compete with a significant number of athletic and leisure footwear companies, athletic and leisure apparel companies, sports equipment companies in the United States as well as internationally. Thus, the rapid changes in technology and consumer preferences in the markets for athletic and leisure footwear and apparel and athletic equipment, constitute significant risk factors in company’s operations.
Another risk factor is the failure to maintain the company’s reputation and brand image which could negatively impact the overall business of the company. As the iconic brand of Nike have worldwide recognition, so it is very crucial for the company to maintain and enhance its brand image and reputation. This could only be possible with the best designing and marketing efforts that include advertising and consumer campaigns, product innovation and product quality.
The next risk factor that is very critical for the business of the company is the ability to identify, originate and define product trends along with anticipating, gauging and reacting to changing consumer demands in a timely manner. If the company is unable to anticipate consumer preferences on time and unable to develop new products, it would not be able to maintain or increase revenues and profits of the company. (Form 10-k, pg. 62)
The next risk factor for the company is the reliance on technical innovation and high-quality products in order to compete in the market for their products. As it is very important for the commercial success of the company to rely on technical innovation for which research and development is also necessary. Whenever the company fails to introduce technical innovation in its products, the consumer demand for the products could decline with the decline in the product quality thus affecting the business of the company adversely.
Another major risk factor is the uncertain state of the global economy that could have a material adverse effect on the company’s business, operating results and financial condition as well. The global economic conditions like slower consumer spending, non-availability of financing in the form of credit, exposure to fluctuations in foreign currency exchange rates relative to the
U.S. Dollar and continued volatility in the availability and prices for commodities and raw materials could impact the company individually as well as collectively. (Form 10-k, pg. 62)

d. What is the company’s largest asset? Liability? Is this expected?
The company’s largest asset is the Inventory of the company which is worth $4,838 million and $4,337 million at May 31, 2016 and 2015, respectively and was substantially all finished goods. Yes, this is quite as per the expectations because the company is a manufacturing company.(Form 10-k, pg. 101)

e. How many shares of stock are authorized? Issued? Outstanding?
Common stock at stated value of Nike is:
Class A convertible — 353 and 355 shares outstanding
Class B — 1,329 and 1,357 shares outstanding.(Form 10-k, pg. 101)

f. Did the company repurchase any shares this year? How many?
Yes, as of the end of the fourth quarter fiscal 2016, the Company had repurchased 20.1 million shares at an averageprice of $59.21 per share for a total approximate cost of $1.2 billion under thenew program of shares repurchase approved by the Board of Directors inSeptember 2012.(Form 10-k, pg. 89)

g. When does your company record revenue? If they have multiple revenue streams, you only need to do their primary revenue stream.

The company records the wholesale revenues when title and the risks and rewards ofownership have passed to the customer, based on the terms of sale. The revenue recognitionoccurs upon shipment or upon receipt by the customer which dependsupon thecountry of the sale and the agreement with the customer, if any. While retail storerevenues are recorded at the time of sale and online store revenues arerecorded upon delivery to the customer. Moreover, provisions for post-invoice salesdiscounts, returns and miscellaneous claims from customers are estimatedand recorded as a reduction to revenue at the time of sale. (Form 10-k, pg. 91)

h. If your company has inventory, what method do they use?
Inventories are stated at lower of cost or market and valued on either anaverage or specific identification cost basis. For direct shipments to customers which comes under inventories in transit, the related inventory and cost ofsales are recognized on a specific identification basis. Primarily, the inventory costsconsist of product cost from the Company’s suppliers, as well asinbound freight, import duties, taxes, insurance and logistics and otherhandling fees.(Form 10-k, pg. 106)

i. Ratio Analysis.
i. Calculate the following ratios for each company for the current year and the prior year.
1. Current ratio
Current ratio (2016) = Current assets / current liabilities
=15025/5358
= 2.8
Current ratio (2015) = Current assets / current liabilities
=15587/6332
= 2.5

2. One or two appropriate profitability ratio(s)
(i) Return on Assets (2016) = Net income / average total assets
=3760/21396
= 17.5%
(ii) Return on Equity (2016) = Net Income/Shareholder’s Equity
=3760/12258
= 30.1%
(iii) Return on Assets (2015) =Net income / average total assets
=3273/21597
= 15.15%
(iv) Return on Equity (2015) =Net Income/Shareholder’s Equity
=3273/12707
= 25.8%

a. Why did you choose the ratio(s) that you did? Were there other profitability ratios that you considered?
I chose these ratio because to know how efficient management is at using its assets to generate earningsby calculating ROA and to know how much profit the company generates with the money shareholders have invested by calculating ROE. Yes, there were other profitability ratios e.g. profit margin ratio, gross margin that can also be considered.

3. Debt ratio
Debt ratio (2016) = Total debt / total assets
= 2,010 / 21,396
= 0.09
Debt ratio (2015) = Total debt / total assets
= 1,079 / 21,597
= 0.05
4. Cash conversion cycle ratios
Cash conversion cycle ratio (2016) = (Days inventory outstanding + days sales outstanding) – days payables outstanding
= (((4337+4838)/2/17405*365)+((3241+3358/2)/32376*365))-((2131+2191)/2)*365/17405)
=88 Days
Cash conversion cycle ratio (2015) = (Days inventory outstanding + days sales outstanding) – days payables outstanding
= (((4337*365/16534)+(3358*365/30601))-(2131*365/16534))
=88 Days

ii. Comment on the ratios above.
1.WHY the debt is higher
The debts are higher due to the issue of $1.0 billion of senior notes with tranches, a committed credit facility agreement with a syndicate of banks, which provides for up to $2 billion of borrowings and the commercial paper program which provides loan facility of $2 billion.

2. Comment on whether the change (or lack of change) is good or bad and why.
This change may temporarily help the company to meet its short term and medium term cash needs but if the company is unable to pay back the interest in time or principal amount on its maturity then it may result in several severe legal obligations. This may also result in reputational risk for the business.

j. Calculate the estimated stock price assuming a 5% discount rate. Be sure to remove any one-time
The formula for calculating Stock price is

P= 0.62/(5%-1.7%)
P = 18.77

k. Review the Statement of Cash Flows for the company.
i. Identify the two largest items in investing activities. Do you agree with their use of cash?
The two largest items in investing activities were the short term investment (including sales, maturities and purchases) from net sales/maturities to net purchases. In fiscal 2016, there were $57 million of net purchases of short-term investments compared to $935 million of net sales/maturities of short-term investments in the same period of fiscal 2015. The Second largest item of investing activity was “Additions to property, plant and equipment”whichwere $1,143million for fiscal 2016 as compared to $963 million for fiscal 2015. The increase in Additions to property, plant and equipment resulted from continued investments in infrastructure to support current and future growth, primarily relating to supply chain and corporate initiatives, as well as expansion of company DTC operations.
This was a huge investment made which has instantly increased the current ratio of the company showing that the company is highly liquid. This may alarm the decision of investor to invest in this business.
ii. Repeat for financing activities.
Cash used by financing activities was $2,671 million for fiscal 2016 comparedto $2,790 million for fiscal 2015, a decrease of $119 million, as the company has repurchased its shares and dividends were more than offset by the receipt of$981 million in net proceeds from the issuance of long-term debt in October2015.

Identify two NON-FINANCIAL items for each company that might impact the decision of an investor.
The two NON-FINANCIAL KPI which can affect the company performance may be the company is dependent on some key personnel, losing whom can cause the company severe damage. If the company is unable to retain those personnel it may not only affect its business strategies but may give the competitors an edge in market. Secondly the company need to consistently increase the technological growth and innovation in its product. As Nike is operating at global level so either if it not make technological advancements or if it fails to meet the market expectation then the stock price may result in decline. Apart from that the securities class action litigation should also be considered ignoring which can result in substantial costs and a diversion ofmanagement’s attention and resources that are needed to successfully run NIKE business.

m. Using the entire analysis thus far, would you recommend that an investor BUY, SELL, or HOLD this company? What were the two or three key factors that influenced your decision?
As the company sales has increased from 30,601(2015) to 32,376 in 2016 and the Net Income of the company has also shown an increase so it is showing a good performance of the company i.e. the real sales growth. This is also visible from the quarterly provided data of sales and net income. The improved margin of the company shows that it is also entering and capturing new markets where its product is welcomed in the market and the last point is the company decision of Stock Buyback Programrather than using the cash to make acquisitions or pay dividends is a good sign that management feel the stock is undervalued. So preferably the investor should either hold or buy the stock of Nike Company.

References:
1. Anon, (2017). [online] Available at: http://www.nike.com [Accessed 2 Jul. 2017].
2. NASDAQ.com. (2017). Nike, Inc. Competitors. [online] Available at: http://www.nasdaq.com/symbol/nke/competitors [Accessed 2 Jul. 2017].
3. About.nike.com. (2017). About Nike – The official corporate website for NIKE, Inc. and its affiliate brands.. [online] Available at: http://about.nike.com

3:Demographic background information.

Required textbook:
Wolfram, W. & Schilling, N. (2016). American English: Dialects and variation (3rd Ed)
Directions: For this assignment interview 2 different people.
Ask your volunteers to complete the demographic background information. (Just a reminder, this is voluntary information, please explain that it is helpful to your analysis.)
Give your volunteers a copy of the US map and ask them to circle geographic regions where they believe Americans speak “differently” and label those accents/dialects. They are welcome to give the region a name (NY accent, Southern accent, CA accent, etc.), and they are welcome to describe what makes the accent distinct or different (e.g., nasal, correct, slow, formal, informal). If they want to give you an example of a pronunciation, grammatical structure, or word that is different in that dialect (e.g., “buggy” for shopping cart, “pop” for soda) make a note of their example(s).
Compare the labels that your volunteers used with the concepts covered in Chapter 1. Did your volunteers seem to have positive or negative perceptions of different accents or dialects? Did any volunteers provide adjectives for the “different” dialects? Did any of the participants describe their “home” geographic area as “different”, or were the “different” areas in another part of the US?
Report your findings to your group in the discussion board. In addition, respond to at least one of your group members.

If you are interviewing face to face, give each volunteer a different copy of the US map. (You don’t want previous volunteers’ answers to influence your current volunteer.) If you are interviewing via an e-communication, ask your volunteer to name some of the states where people speak differently and to provide a label for that region/accent.

Volunteer Demographic Information

Volunteer 1
Native language:
Area(s) of residence:
Ethnicity (optional):

Volunteer 2
Native language:
Area(s) of residence:
Ethnicity (optional):

3:Industrial Statesmen

Were the business leaders of the Gilded Age “Industrial Statesmen” of “Robber Barons?”

Industrial Statesmen