Nike In: Cost of Capital - Case Study Example

Only on StudentShare

Extract of sample
Nike In: Cost of Capital

Nike is a global investment and, therefore the cost of its capital has great implications to various stakeholders across the globe. Currently the company has been experience a decrease in the market value for its stock. Capital cost can therefore, be a useful ratio that manager in the company can apply to establish its worth. This paper will therefore, establish the cost of the company’s capital 1. WACC (The weighted cost capital) is the rate at which an investment is expected to meet its debts. WACC is therefore, the value at which a company is ready and able to pay for its capital. This involves the rate at which a company expects to pay its debtors and the rate at which the company is expected to pay dividend to its shareholders. Most companies consider raising capital from various sources such as debtors, sale of stocks and government subsidies. Using these ratios, investors are able to establish the most appropriate source of capital for their company. A company’s cost of capital is useful to a company since it evaluates the worth of an investment. The worth of an investment establishes the expected return on similar capital invested in an alternative investment. Therefore, the rate enables investors to make appropriate investment decisions. ...
Download paper

Summary

Nike In: Cost of Capital Investors require knowing the return on their capital in order to make long-term strategic plans in an investment. Cost of capital is the value of expected returns on capital. This rate is calculated by establishing the rate of return on the capital if it was invested in an investment of similar risk…
Author : vfunk

Related Essays

Nike SWOT Analysis.
Introduction and Market Overview
...
12 pages (3012 words) Essay
Marketing Mix Strategies of Nike and Reebok in India
The intention of this study is marketing mix as a very important part in crafting marketing strategy of a company. Many companies who do not focus on their marketing mix well enough face troubles. There are a lot of perils for a company that does not devise an excellent marketing mix strategy for its target customers. There are also a lot of examples of firms that despite of having a good product went out of business because their marketing mix efforts was not good. Many firms achieved great success from their average products because their marketing mix catered efficiently to the needs of the...
4 pages (1004 words) Essay
Marketing plan for NIKE
Nike was founded on January 25th 1964 by Bill Bowerman and Phil Knight as Blue Ribbon Sports. The company adopted the name Nike on May 30, 1978 and began marketing its products and services under its own brand. Today, the company operates retail stores under the Niketown name. In addition, the company is known worldwide for sponsoring a great deal of sports activities and supporting many sports teams. The Nike brand is presently found in many countries across the world notably in the United States, Europe, Asia Pacific and the Americas (Esty & Winston, 2009). Courtesy of its innovative design...
12 pages (3012 words) Essay
Strategy Implementation - NIKE
For a large capital company, these continued gains are an amazing performance. This paper is a strategy implementation for Nike. (Nike Inc., 2012) While the statistics above shows strength in Nike’s strategy, this ratio has several limitations. It does not account for the money’s time-value, in addition to the risk associated, with an investment or stock (Harper, 2012). The ratio also overvalues investments as the equation overlooks long-term costs in favor of short-term savings. Finally, since they can be calculated using different criteria, these ratios have a problem with consistency....
3 pages (753 words) Essay
Nike Fuel Band
As such, this paper seeks to describe how Nike Fuel Band is currently utilizing each of the components of the IMC mix mentioned above. Nike, a giant in manufacturing and selling athletic and other sporting related products has announced a new and more colourful Nike+ FuelBand SE that will be available on 6th November 2013. According to Berg (2013), “this product enables users to track individual sessions and see the points earned in real time. The band is still largely based around Fuel points.” The image below shows how the fuel band looks like. Given that this is a new product in the...
4 pages (1004 words) Assignment
Marketing Principles
As noted in the report, when intending to launch a new product, market research should be carried out first in order to establish the needs of the people. Marketing messages should be tailored in such a way that the product is presented as better than other similar products offered in the market. The message should also be designed in such a way that it can positively change the behaviour and attitude of people. Table of contents 1.0 Introduction 3 1.1 Task1 3 1.2 How Nike increases customer satisfaction 5 2.1 Task 2 6 2.2 Segmentation criteria used by Nike 7 2.3 Market targeting used by Nike...
15 pages (3765 words) Essay
In instruction box
The threats are the elements that could lead the business to trouble. It is important to conduct a SWOT analysis as it may later inform the business planning steps that are directed to the realization of business objectives (Armstrong, 1996). Every serious business should conduct and implement a SWOT analysis every so often to evaluate its position in the market. This paper will involve a SWOT analysis of Nike Company and will go further to analyse what businesses need to do to gain a stronger market position. About Nike Company Nike Incorporated is a multinational business that designs,...
5 pages (1255 words) Essay
Got a tricky question? Receive an answer from students like you! Try us!