firm’s bond‚ Johanna only used the interest expense of the year divided by the average debt balance‚ which fully ignored the discounted cash flow of the cost of debt. 2. If you do not agree with Cohen’s analysis‚ calculate your own WACC for Nike and be prepared to justify your assumptions. Combining the analysis above‚ we now give our own WACC calculation as following: 2.1 The value of debt(based on EXIHIBIT 3). Since the book value of debt may represent the market value‚ we merely
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In the case study Nike: Managing Ethical Missteps and Seizing Opportunity‚ we explore the story of Nike: the world’s leading seller of athletic wear. As some may know and others may not‚ Nike was actually started (similar to FedEx by Fred Smith) from a college paper by Phil Knight which conceptualized importing athletic shoes from Japan into the United States. In 1964‚ Knight teamed up with a colleague and launched Blue Ribbon Sports‚ a distributor of Japanese athletic shoes which also marketed its
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Case Study Nike: The Sweatshop Debate MGT/448 November 2010 Case Study Nike: The Sweatshop Debate Nike was established in 1972 by Phil Knight. This marketing company is famous for their athletic shoes and apparels sold in some 140 countries (Hill‚ 2009‚ p. 154). Nike does not manufacturer any of these products they only design and market them. These products are manufactured in other countries such as Vietnam‚ Indonesia‚ and China‚ where the cost of labor is low. For years Nike has had repeated
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within developing countries with particular emphasis on Nike outsourcing history. Summary: Overview/history of company; Nike is one the leading shoe and athletic clothing company in the United States and probably one of the largest in the world. In 1993‚ Nike’s yearly revenue became as large as the NBA‚ NFL‚ and Major League Baseball’s television deals‚ ticket sales‚ and merchandising sales combined. In addition to their phenomenal sales‚ Nike has marketed itself so thoroughly that it has literally
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LO3: Identify and analyse the individual elements of the extended marketing mix LO4: Apply the extended marketing mix to different marketing segments and contexts Context The purpose of this report is to apply your knowledge of marketing to Nike (a well known sports retailer). Your report should explain the concepts of marketing and illustrate segmentation‚ targeting and positioning using one of their products. Finally‚ you will analyse their marketing and devise a marketing mix for one
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Nike Project Report Mridul Jain‚ Krishore Veerasekar‚ Ziad Ahmed Table of Contents ABOUT NIKE 1 Description of Nike 1 MAJOR EVENTS 2 Acquisition 2 Divestitures 2 STRATEGY 2 Advertising 2 NIKE’S FINANCIAL RATIOS 3 Liquidity or Working Capital 3 Current Ratio 3 Quick Ratio 3 Working Capital 4 Efficiency and Asset Management 5 Total Asset Turnover 5 Fixed Asset Turnover 5 Days Sales Outstanding 5 Debt Management 6 Total liabilities to Total Assets 6 Long-Term Debt to Capital 6 Times Interest
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selected was Nike. Nike is engaged in the marketing and sales of footwear‚ apparel‚ equipment‚ accessories and much more around the globe. The primary reason I selected this was the company was despite proving itself to be one of the most sustainable businesses in the world. There is quite a significant amount of controversy on just how sustainable some of its business practices truly were in the past. The main controversy being its use of sweatshops to produce its merchandise. Nike is quite possibly
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Nike Sweatshops Nike is the largest seller of athletic footwear and apparel in the world. The company is primarily engaged in the design‚ development‚ and worldwide marketing of footwear‚ apparel‚ equipment and accessories. The company operates in the US‚ Europe‚ Asia Pacific‚ the Middle East and Africa. It is headquartered in Beaverton‚ Oregon. (Datamonitor‚ 2006‚ p 4) By shifting manufacturing to developing countries‚ Nike is able to achieve significant cost savings owing to the lower
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issues with Cohen’s calculation‚ and then analyze an new WACC to decide whether we should invest in Nike Inc. Many issues should be addressed regarding Joanna Cohen’s WACC calculation. First‚ to calculate the debt cost of capital‚ Cohen divided the total interest expense by the company’s average debt balance. This is an issue because she did not take into account the current yield on publicly traded Nike debt. Another issue that should be addressed is the calculation of the equity cost of capital. Using
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analysis assumes Nike debt is trading at par – it is not ▪ Equity should be based on market value‚ not book value ▪ Hence total will be based on market cap.‚ not balance sheet ▪ Her debt cost is wrong ▪ She should use the current or projected cost rather than a historic one ▪ i.e. use a Bloomberg terminal (other terminals are available) to research yields on debt of the same credit rating as Nike ▪ It is unlikely Nike has a cost of
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