ADJUSTMENTS ON WORK

Key goods and services

Nike products are delivered all over the world and required of every region is different. Therefore, the organization structure is established in a way that helps in the regionalization of business strategies. This regionalization promotes the value chain so that customer expectations can be fulfilled. The boundaries that are set by Nike are flexible to meet the expectation of customers. This structural support along with Nike culture helps them to over the crises of business and financial development. This organizational structure also supports their initiatives for the promotion of business. This semi-autonomous regional division of Nike set boundaries for decision making and decisions are made region-wise requirements.

Organization

The organizational structure that is followed at Nike is based on “geographical divisional organization structure”. This structure is made as per the needs of Nike and their aim to target regional markets. the notable characteristics of Nike's organizational structure are, global corporate leadership, semi-autonomous geographic divisions, and global division for converse and brand licensing. The financial statements of Nike are also made based on divisions. The revenues and expenses are mentioned as per division.

Income

In the table mentioned below the indicators from the income statement of the company are used to present it in a summarized way of how its revenues increase from 2017 to 2019. In 2017 the revenues are $34350 billion while in three years it grows up to $39,117 billion. In the same way, gross profits are also increased from $15,312 billion in 2017 to $17,474 billion in 2019. There is a slight change is operating income that is $4,749 billion in 2017 and $4,772 billion in 2019 (nike.com, 2019 ). Over income of a company is not increase in a time of three years, it shows good income in 2017 that is $4,240 in 2017 and 4,029 in S2019. The detailed income statement mentioned in the Appendix.

From the graphical presentation of the income statement, it is analyzed that the financial performance of the company in 2018 is week because the net income of this year is far much less than the income of 2017 and 2019.

The financial value of the company

The financial health indicators that are used here are price to earnings ratio, price to sale ratio, price to cash flow ratio and net profit margins. In the below-mentioned table, the financial value of the company as compared to the industry is shown to illustrate how well the company is performing (macrotrends.net, 2019 ). The price to earnings ratio of Nike is 34.17% that is greater than industry that is 24.9%, price to sale ratio is 3.6% and industry shows ration o 2.77%, price to cash flow ratio is 41.53% and industry ratio is 32.76% and net profit margins are 10.81 while industry margins are 11.43%. Thus, it shows that financial performance is well better than the performance of the industry. The company is ahead of the industry.

Financial health capitalized

The indicators that measure the financial health capitalization of the company return on equity, return on assets and return on capital invested. The return on equity shows how well the company is performing by using its investment to generate good revenues. The higher value of equity that is 47.32% shows that the company is generating good enough from their invested capital that is 47.32%. This is much greater than the industry that is 29.40%. Return on assets shows how much a company is generating from its assets. Return on investment shows that how much profits are generated from an investment over a certain period (sec.gov, 2019 ). The return of assets is almost the same as an industry that is 17.66. The return on investment is 25.35% that is greater than the industry investment that is 23.58%. The higher ration of return on investment shows that the company attain good gains form their investment

Financial health growth

The indicators that are used to measure the financial health of growth of the company are quick ration, current, long term debt to equity ratio and total debt to equity ratio. Through this ratio, it is analyzed whether the company has ample resources that will trigger its future growth (nike.com, 2019 ). The value of the quick ratio is 1.29. it shows that the company has ample and liquidate resources to pay off their liabilities current ratio shows whether the company has cash and other resources to meet its current liabilities. Hence, the current ratio is calculated as 2.01 that is good but less than the industry average.

Financial health: financial value

The financial value of the company is analyzed through net fixed assets, total asset turnover and equity turnover of a company. If the company has good financial assets than it have a good financial value in the market. From the analysis, it is evaluated that Nike has always enjoyed a good financial value. In 2017 the net fixed assets turnover is 8.61 that is 8.25 in 2019. In the same way, the total assets turnover is 1.65 in 2019 and the turnover of equity is 4.33 that is greater than in previous years (macrotrends.net, 2019 ).

Financial performance: cash flow

The indicators that are used to measure the financial performance of cash flow are cash provided by operation, cash used in investing activities, cash used in financing activities, the net increase in cash equivalent and cash equivalents at the end of the year. In 2019 the cash provided by the operation is $5903 billion, $4955 billion in 2018 and $3640 billion in 2017. In 2018 there is a positive cash inflow in 2018 while it remains negative in 2017 and 2019 means no cash is generated from investing in 2017 and 2019. The same negative cash flow is in financing activities. The net increase in cash is highest in 2017 and lowest in 2019 that is only $217 billion. As the cash generated from operations is greater than the cash generated from investing and financing activities (sec.gov, 2019 ). Therefore, cash and cash equivalents at the end of the year 2019 are greater i.e. $4466 billion than as compare to 2017 and 2018. Thus, the cash flow position in 2019 is better than the previous two years.

Concluding the financial performance of Nike in a nutshell, it is analyzed that Nike enjoys a good financial position. The only problem that they face is that they do not enjoy any cash flow from investing and financing activities. The financial position of the company helps them in taking decisions regarding the good of the company. The financial health of the company strengthened them from taking decisions for further expansion.

References macrotrends.net. (2019 , 1 1 ). NIKE Financial Statements 2005-2019 | NKE. Retrieved from macrotrends.net: https://www.macrotrends.net/stocks/charts/NKE/nike/financial-statements nike.com. (2019 , 1 1 ). NIKE, Inc. Reports Fiscal 2019 Fourth Quarter and Full Year Results. Retrieved from nike.com: https://news.nike.com/news/nike-inc-reports-fiscal-2019-fourth-quarter-and-full-year-results sec.gov. (2019 , 1 1 ). NIKE, Inc. Retrieved from sec.gov: https://www.sec.gov/Archives/edgar/data/320187/000032018718000142/nke-5312018x10k.htm

Appendix 1:

Financial Health Capitalize

Return on Equity  Nike Industry 0.47320000000000001 0.29399999999999998 Return on Assets  Nike Industry 0.17660000000000001 0.17599999999999999 Return on Investment  Nike Industry 0.2535 0.23580000000000001

Financial value

May 31, 2019 Net fixed asset turnover Total asset turnover Equity turnover 8.25 1.65 4.33 May 31, 2018 Net fixed asset turnover Total asset turnover Equity turnover 8.17 1.62 3.71 May 31, 2017 Net fixed asset turnover Total asset turnover Equity turnover 8.61 1.48 2.77

Income

May 31, 2019

Revenues Gross profit Operating income Net income 39117 17474 4772 4029 May 31, 2018

Revenues Gross profit Operating income Net income 36397 15956 4445 1933 May 31, 2017

Revenues Gross profit Operating income Net income 34350 15312 4749 4240

company P/E Ratio  Price to Sales  Price to Cash Flow  Net Profit margin 34.17 3.6 41.53 0.1081 Industry P/E Ratio  Price to Sales  Price to Cash Flow  Net Profit margin 24.9 2.77 32.76 0.1143

company Industry

Quick Ratio 1.292.13

Current Ratio 2.013.06

May 31, 2019May 31, 2018May 31, 2017

Net fixed asset

turnover

8.258.178.61

Total asset

turnover

1.651.621.48

Equity turnover4.333.712.77

201920182017

Cash provided by

operations

5,903 4,955 3,640

Cash (used) provided by

investing activities

(264)276 (1,008)

Cash used by financing

activities

(5,293)(4,835)(1,942)

Net increase (decrease)

in cash and equivalents

217 441 670

Cash and equivalents,

end of year

4,466 4,249 3,808

Nike Inc.

Consolidated Income Statement

US$ in millions

12 months endedMay 31, 2019May 31, 2018May 31, 2017

Revenues39,11736,39734,350

Cost of sales(21,643)(20,441)(19,038)

Gross profit17,47415,95615,312

Demand creation expense(3,753)(3,577)(3,341)

Operating overhead expense(8,949)(7,934)(7,222)

Selling and administrative expense(12,702)(11,511)(10,563)

Operating income4,7724,4454,749

Interest income827027

Interest expense(131)(124)(86)

Interest income (expense), net(49)(54)(59)

Other income (expense), net78(66)196

Income before income taxes4,8014,3254,886

Income tax expense(772)(2,392)(646)

Net income4,0291,9334,240

Based on:

10-K (filing date: 2019-07-23),

10-K (filing date: 2018-07-25),

company Industry

P/E Ratio 34.1724.9

Price to Sales 3.62.77

Price to Cash Flow 41.5332.76

Net Profit margin10.81%11.43%