Company Name: Nike
Stock Ticker: NKE
Industry and Brief Description: NIKE Inc was incorporated in 1967
under the laws of the State of Oregon. Their principal business
activity is the design, development and worldwide marketing and
selling of athletic footwear, apparel, equipment, accessories, and
services. c
Valuation Policies: Nike uses adjusted historical cost for their
inventory valuation. “As the firm consumes the service potential of an
asset, the firm expenses the consumed portion (that is, the asset is
reduced and an expense is increased).” Additionally, Nike uses the
lower of cost or net realizable value method meaning, the inventory is
valued at the lower of cost or the amount it can sell the goods for. I
think this is the best way to value inventory because goods are
constantly being bought and sold, the prices frequently changing and
raw materials, transportation costs, etc. are included in inventory as
well.
The company that I am using for the project is Nike. The stock ticker
for Nike is NKE. The industry that NIKE is most famous for is its
footwear. They also sell apparel, equipment, and accessories. The
company headquarters is located in Beaverton Oregon. c Bill
Bowerman and Phil Knight founded the company on January 25,
1964. John Donahue is the current CEO. Nike currently has over
73,000 employees and assets of over 37.4 billion USD. The item I
selected from the balance sheet that caught my eye is the Notes
Payable piece. From May 31, 2021, to May 31, 2022, there was a
400% change in this line. c This seems to be a huge change in a year's
time. Nike uses two different valuation methods; a market multiple-
based approach and a discounted cash flow (DCF) valuation. DCF is
based on a two-stage approach that discounts the company's
expected cash flows using an estimate of the weighted average cost
of capital.
Nike has a great track record of performance in the financial sector,
especially over the long term. c Stocks are not undervalued and
valuation levels are reasonable. Nike has a clear overall respectable
approach on marketing merchandise. They are a leader on the
competitive side and are always looking to expand their customer
base for their merchandise.
