Nike : The World 's Most Successful Sportswear Industry

1247 WordsDec 11, 20155 Pages
Miu Kataoka, Spencer Kim & Cody Miyasato Principle of Finance – BUS 305 NIKE, Inc. Overview: Nike, founded in January 25 1964 by Bill Bowerman and Phil Knight, is the world’s largest sportswear designer holding a dominant position in the worldwide athletic footwear industry with a market share of 33%. It markets and distributes athletic footwear, apparel, equipment and accessories, constantly emphasizing on technological innovation, developing and manufacturing products that help reduce injury, maximize comfort and enhance athletic performance. However, a large percentage of the products are worn for casual or leisure purposes. Nike also gains income for its wholly-owned subsidiary brands such as Hurley, Converse and Jordan Brand. Why we…show more content…
From a relative viewpoint, Nike is operating far more efficiently than the industry average in the Textile - Apparel, Footwear & Accessories Industry. From viewing these ratios, it is clear that Nike is operating very efficiently year-to-year and well relative to the industry average. Competitors Nike Under Armour Adidas Net Profit Margin 10.70% 5.82% 3.29% Operating Profit Margin 13.64% 10.40% 7.07% Return on Assets 15.15% 9.56% 5.85% Return on Equity 25.76% 15.39% 11.02% Price-earnings ratio 33.2 83.80 26.57 When comparing Nike to two of its top competitors in the same industry (textile: apparel, footwear & accessories) we found using these five metrics (above) to be the most suitable. Nike is performing very well compared to its top competitors; Under Armour and Adidas. Nike has the highest net profit margin and operating profit margin, which indicates that the company is better at managing its cost and turning sales into profit. Also, Nike has an extremely high return on assets (ROA) and return on equity (ROE) compared to Under Armour and Adidas. The high ROA indicates that Nike is efficiently using its assets to boost sales. The ROA also shows that the company has solid financial and operating performances. The high ROE reveals that Nike’s management is utilizing its equity base efficiently, therefore telling shareholders and investors their money is being used effectively. Finally, Nike does not have the highest price-earnings
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