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Essay example - Interpretation assignment

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Finance & Accounting
Pages 6 (1506 words)
<Title> <Name and Section # of course> <Instructor Name> <Date> Word Count: 1,575 words (excluding abstract) The report will analyze the financial position of Nike in 2012 and 2013. It will calculate the required ratios, examine the trends and then investigate upon the reasons behind such trend…

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These financial metrics point to the safety for the creditors and long-term loaners of the company; hence a low ratio becomes a point of concern for the stakeholders. The improvement in the current ratio as well as the quick ratio indicates that the company is now in a better position to pay its term obligations. This improvement is largely due to increase in the current assets especially cash and equivalents, and short term investments. Nike held $3.47 in 2013 as compared to $3.05 in 2012 for every $1 of short term liabilities as shown in appendix. Likewise, the company’s current ratio is almost at par with the industry average. Similarly, the company has seen a drastic improvement in the quick ratio in 2013 as compared to 2012. Nike held $2.31 in 2013 as compared to $1.93 in 2012 for every $1 of short term liabilities as shown in appendix. Compared to the industry average, the company leads the market with a high ratio. The improvement is again associated to the large investments in cash as well as marketable securities. The inventories, prepaid and deferred taxes only saw slight increments. Therefore, the liquidity analysis shows that Nike is in a better position to handle any unexpected current liabilities and contingencies in 2013 as compared to 2012, and compared to its industry rivals. PROFITABILITY ANALYSIS Nike’s revenues grew by 11% in 2013. ...
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