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Nike, Inc. I.

Background of the Company

Nike, Inc., previously Blue Ribbon Sports (1964–78), is an American sportswear corporation based in Beaverton, Oregon. Bill Bowerman, a track & field coach at the University of Oregon, and his former student Phil Knight launched Blue Ribbon Sports in 1964. In 1966, they created its first retail location, and in 1972, they introduced the Nike brand shoe. In 1978, the firm was renamed Nike, Inc., and two years later, it became public. Nike had retail outlets and distributors in over 170 countries by the early twentyfirst century, and their logo—a curved check mark known as the "swoosh"—was instantly recognizable around the globe. Nike steadily expanded its business and diversified its product line beginning in the late 1980s, acquiring companies such as Cole Haan (1988; sold in 2012) and Converse, Inc. (2003), sports-equipment manufacturer Canstar Sports, Inc. (1994; later called Bauer and sold in 2008), and athletic apparel and equipment company Umbro (2008; sold in 2012). Nike ACG (all-conditions gear) was founded in 1996 to market equipment for extreme sports like snowboarding and mountain biking. Nike began marketing sports-technology peripherals in the early twenty-first century, such as portable heart-rate monitors and high-altitude wrist compasses. II.

Relevance of Financial Management Concept to the Company

For the company to operate well, ratio analysis is important for a company's financial position, liquidity, profitability, risk, solvency, efficiency, and operations effectiveness, as well as proper fund utilization. It also indicates the trend or comparison of financial results, which can be useful for shareholders making investment decisions. We interpret the statistics from the balance sheet and income statements using ratio analysis. When it comes to financial results, each stakeholder has various objectives. For example, equity investors are more interested in the long-term growth of dividend payments and the organization's earning ability. Creditors want to know that they will be paid on time for their outstanding debts. III.

Examples of Other Uses and Application of Relevant Financial Management Approach

The ability to turn assets into cash quickly and cheaply is referred to as liquidity. Liquidity ratios are most relevant when they are used in comparative form. This analysis could be conducted internally or externally. In general, a greater liquidity ratio indicates that a company is more liquid and has better debt coverage. When comparing industries, liquidity ratio analysis may not be as helpful because different enterprises demand different funding structures. When comparing enterprises of various sizes in different geographical locations, liquidity ratio analysis is less effective. There are types of liquidity ratios such as Current Ratio, Quick Ratio and Cash Ratio.

The Current Ratio of Nike is derived by dividing the company's Current Assets by its Current Liabilities. It determines if a company has sufficient cash or liquid assets to cover its current liabilities in the coming fiscal year. The ratio is used to evaluate a company's liquidity. This aids investors in their quest for stocks that are currently trading at levels that are greater or lower than their true value. If the real value exceeds the market price, Nike Inc is deemed cheap, and we propose that you buy it. Otherwise, a sell signal is generated. Based on the video, Nike's current ratio ended 2016 at 2.8. In the next year, the company's current ratio would moderately increase to 2.9. Subsequently, in the next two years, the firm would substantially reduce its current ratio ending 2019 at 2.1 and in 2020, increase its current ratio ending the year at 2.48. The mentioned approach above is primarily the function of the finance manager. Generally, they oversee the financial health status of an entity and ensure its viability. IV.

Ethical Considerations Relevant to Topic

Nike is the world's leading maker and supplier of athletic shoes, gear, and sporting goods. Though it appears like every man and his dog now owns a pair of Nikes, the corporation professes to be dedicated to promoting the safety, health, and well-being of people and the environment. Not long ago, the Nike image was linked with sweatshops and unethical manufacturing. Nike was hesitant to respond at first, but as pressure mounted, it gradually improved its monitoring measures, raised the minimum age of workers, and increased factory audits. Nike has been accused of having ethical issues on several occasions. The firm has been involved in the mistreatment of workers and neglect of corporate social responsibility (CSR). The firm is the company in the manufacture of sportswear, including apparel and footwear. The management is responsible for instituting an organizational culture that will encourage healthy ethical practices. Failure to embrace ethical issues ruins the reputation of the company. However, Nike has improved its ethical standards after the video was released in 2011. The company has made an effort to improve the firm's reputation by embracing ethical standards and providing a report about its employees. It took the company more than five years to improve its reputation after the Sweatshop video. The company believed that one of the fundamental rights is the protection of life and health in the workplace. They ensure that all employees at their suppliers’ facilities are provided a healthy and hygienic workplace which enriches a strong culture and safety. Despite some unethical issues, Nike still focuses on seeking solutions and doing the right thing to change their unprincipled behavior towards their workers.

References: Borosky P. (2020). “Nike 2020 Financial Report: Financial Statements and Financial Ratios: Defined, Discussed, and Analyzed for 5 Years”. Retrieved from https://qualitybusinessplan.com/nike-financial-report/ “Analysis of Liquidity Ratios”(2020). “Analysis of Liquidity Ratios”. Retrieved from https://www.stock-analysis-on.net/NYSE/Company/Nike-Inc/Ratios/Liquidity#CurrentRatio TeamSweat (2011). “How Ethical is Nike?” (Aug. 2020). “How Ethical is Nike?” . Retrieved from https://goodonyou.eco/how-ethical-is-nike/ “Nike Sweatshops: Behind the Swoosh”. Retrieved from (57) Nike Sweatshops: Behind the Swoosh - YouTube Nike Inc. (n.d). “Human Rights and Labor Compliance Standards”. Retrieved from https://purpose.nike.com/human-rights

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