Case Analysis of Nike‚ Inc.: Cost of Capital Apparently‚ the issue of Nike’s case is to control and check the calculation cost of capital done by Joanna Cohen who is the assistant of a portfolio manager at NorthPoint Group. But I am willing to tell you that it can be a complex case in which we can doubt about sensitivity analysis done by Kimi Ford (portfolio manager) because her assumptions such as Revenue Growth Rate‚ COGS / Sales‚ S &A / Sales‚ Current Assets / Sales‚ and Current Liability
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FORD MOTOR COMPANY: SUPLY CHAIN STRATEGY I. VIEWPOINT Teri Takai‚ Director of Supply Chain Systems at Ford Motor Company II. TIME CONTEXT Late 1990s III. STATEMENT OF THE PROBLEM How should the company use emerging information technologies (i.e. Internet technologies) and ideas from new high-tech industries to change the way it interacted with suppliers? IV. OBJECTIVE To be able to make the supply chain run smoothly by eliminating bottlenecking
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Joanna Cohen’s WACC calculation? Why or why not? 2. If you do not agree with Cohen’s analysis‚ calculate your own WACC for Nike and justify your assumptions. 3. Calculate the costs of equity using CAPM‚ the dividend discount model‚ and the earnings capitalization ratio. What are the advantages and disadvantages of each method? 4. What should Kimi Ford recommend regarding an investment in Nike? 2 Case Overview Nike‚ Inc. NorthPoint Group Investment Decision Current share price of USD 42.09 Declining
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growth above 15%. Kimi Ford‚ a portfolio manager at NorthPoint Group has been tasked with analyzing Nike and coming up with a valuation for Nike so that her company can decide whether it is a good investment or not. She found that at a discount rate of 12% the company is overvalued‚ while with a slight decrease in the discount rate‚ to 11.7% the company is undervalued. In order to value the company correctly an accurate cost of capital must be estimated. Analysis An analysis of cost of capital
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NIKE CASE STUDY 1. Why is it important to estimate a firm’s cost of capital? What does it represent? Is the WACC set by investors or by managers? Weighted average cost of capital or WACC represents the overall cost of capital in the company. It takes into considerations cost of debt and cost of equity. As company’s value can grow by increasing its assets that could be financed either be debt or equity and cost of capital shows how much it costs to do that. Cost of capital is a very important component
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Nike Analysis Table of Contents Company history Pages 3-5 Environmental issues Pages 5-6 Marketing Objective Pages 6-7 Strategy Control Page 7 R and D Page 8 SWOT Pages 9-11 Competition Strategy Page 11 Political/Legal Page 12 Cultures Page 12 Demographics Page 13 Economic Strategy Page 13 Global Strategy Page 14 Environmental Strategy Page 15-16 Long Term Objectives Page 16 Specific recommendations Page 17 Conclusion . Page 17 Financials
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Ahmet Ali Dinler 2011301264 The Ford Motor Company Mission Statement ONE FORD MISSION: ONE TEAM People working together as a lean‚ global enterprise for automotive leadership‚ as measured by: * Customer‚ Employee‚ Dealer‚ Investor‚ Supplier‚ Union/Council‚ and Community Satisfaction ONE PLAN * Aggressively restructure to operate profitably at the current demand and changing model mix * Accelerate development of new products our customers want and value * Finance
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Company Evaluation Project Of Nike Corporation Submitted By: Steven Ritter May 10‚ 2007 Financial Analysis Description of Company History Nike Corporation has become one of the most competitive sports and fitness companies worldwide. Two runners‚ Bill Bowerman and Phil Knight‚ from a small town in Oregon embarked upon the business with a handshake agreement. The enterprise began in January of 1964 with the introduction of Blue Ribbon Sports. In 1966 the handshake between
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Joanna Cohen’s WACC calculation because she mistakenly used historical data to estimate the future cost of debt. Joanna calculated the cost of debt by taking the interest expense for 2001 and dividing it by the average debt balance. The cost of debt for Nike is the effective rate that it pays on its current debt‚ meaning the yield to maturity of bonds should be used to make an estimate instead of the average debt balance. Through the use of past data‚ the average balance of debt‚ the 4.3% before-tax cost
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| NIKE‚ INC.: COST OF CAPITAL | | | | | | Introduction Our report aims to help Kimi Ford make a decision on her investment of Nike. We choose WACC as our method to estimate the cost of capital‚ which can be used as a discount rate to verify whether Nike is correctly valued in current market. We have mainly four steps to calculate WACC: I. Identify the type of cost of capital; II. Figure out the weights of debt and equity; III. Calculate the cost of debt and equity respectively;
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