Nike Essay Example | Topics and Well Written Essays - 1000 words

Nike - Essay ExampleI will further perplex on the pecuniary performance with the help of the following ratio analysis. For the ratio analysis, the figures have been taken from the 2008 and 2009 financial statements.The current Ratio evaluates the unstableity of the company. It represents a safety net for the creditors. Nike has improved its liquidity over the outlive year. It now holds $3 for every $1 of its short term debts as comp atomic number 18d to $2.7 of last year. In compare to the relevant industry, it is one of the most liquid companies (Bloomberg, 2010). The analysis further shows that Nike holds an excess of the working capital in current assets which should be invested in the marketable securities for generation of further income.The Quick Ratio is another sum of money of solvency and measures the liquidity of the company. This ratio removes the inventory and prepaid from the current assets as they are not as liquid as others. Nike has improved its liquidity assig n in the market with a ratio of 2.4 as compared to 2.1 in 2008. It now holds $2.4 for every dollar of short term obligations to the creditors. The analysis further shows that more than 50% of the assets are help up in the receivables and hence, the company depends on the collections for meeting of the obligations. Compared to the industry, Bloomberg again reflects on the liquidity position of the company as one of the better companys income (Bloomberg, 2010).The Debt to Equity ratio indicates the strength of the remainder sheet rather than the growth and earnings prospects. Nike has reduced its debt ratio from 6% to 5% in 2009. counterbalance though, the company increased the lending but at the same time, it also increases its equity in the market. Nike has perpetually maintained its strength in the balance sheet because of the less leverage. Nike generated $0.05 in addition to a dollar in equity. Industry comparison shows that the company is least risky but it must add on its de bt more so that it can generate