The given analysis will primarily focus on Nike Inc., which focuses on business operations, such as selling, global marketing, development, and design of athletic footwear, services, accessories, apparel, and equipment. The current market price per share is $167, and for the last week, the value fluctuated between $164 and $166 (Mergent, 2021). Its current CEO is John Donahoe, and its headquarters are located in Oregon state of the United States.
In the case of Nike’s revenue for the past three years, from 2019 to early 2020, the company experienced stable growth in revenue from $39.1 billion to $41.3 billion (Mergent, 2021). However, after the pandemic hit the global market, the revenue dropped to $37 billion, and today it is equal to $44.5 billion (Mergent, 2021). In regards to operating income, a similar trend is present, with $4.8 billion in 2019, which dropped to $3.1 billion when lockdown began, and it is almost $7 billion as of today (Mergent, 2021). In the case of net income, in 2019, it was around $4 billion, which grew up to $4.3 billion (Mergent, 2021).
The value dropped to $2.5 during initial lockdowns, and today, it is equal to $5.7 billion (Mergent, 2021). Therefore, the company shows stable growth in revenue and incomes, with the coronavirus pandemic being the reason for the drops in numbers.
The equivalent trends are present in the case of margins, where the gross margin was around 45% in 2019, dropped to 43% during first lockdowns, and today it is equal to 44.8% (Mergent, 2021). The operating income margin was around 12.5% in 2019, dropped to 8.3% during the first lockdowns, and today it is equal to 15.6% (Mergent, 2021). The net profit margin was around 11.2% in 2019, dropped to 6.8% during the first lockdowns, and today it is equal to 12.7% (Mergent, 2021). The initial lockdowns hindered the growth of margins, but the company was able to exceed the values of previous years.
Table 1.
The evaluation of total assets, total current assets, total current liabilities, long-term debt, and total shareholders’ equity revealed that the former three were growing steadily for the past three years, which can be accessed in Table 1. Long-term debt was around $3.5 billion for the year of 2019, and the number grew almost thrice and remained at $9.4 billion for 2020 and 2021 (Mergent, 2021). Total shareholders’ equity was decreasing for the years of 2019 and 2020, and it grew to $12.8 in 2021.
Table 2.
Percentages of total current assets, total current liabilities, long-term debt, and total shareholders’ equity of total assets can be viewed in Table 2. Total current assets peaked in 2019 and 2021 and dropped in 2020. Total current liabilities peaked in 2019 and remained around 25-26% in all other years. Long-term debt percentage values doubled from 2019 to 2020 and later dropped to around 25% (Mergent, 2021). Total shareholders’ equity percentages decreased from 38% in 2019 to 25.5% in 2020 and increased to 34%. Therefore, in general, the year 2020 was the period which affected these values the most.
Table 3.
Simple cash flow calculations and results, as well as net operating cash flows, can be found in Table 3. The difference between simple cash flow values and net operating cash flow values is in capital expenditures, which are present in the investing section of cash flow statements. In the case of the company, capital expenditures are solely represented by additions to property, plant & equipment, which are subtracted from net cash flows from operating activities, which yields simple cash flow values.
The key strengths of the company are manifested in the fact that its financial performance shows a strong resilience to the global disturbances, where it was able to recover its growth, revenue, and income after initial lockdowns. In addition, the company was able to preserve its key assets and avoid accruing excessive amounts of debt. Although the income statements and balance sheet showcase that Nike was hit heavily by the pandemic, its recovery is a strong one. Table 4 shows that balance sheets and their derivatives indicate that the company is resilient to major market disruptions since there were no significant fluctuations in assets. However, income statements and related statements show that Nike is susceptible to changes in market demand. The overall financial performance can be categorized as strong due to an exceptional recovery and preservation of assets.
Table 4.
Reference
Mergent. (2021). Nike Inc. Mergent Online. Web.