Nike vs. Reebok Financial Results Analysis (Fiscal Year 1998-2002)

Outlines

I. Background -------------------------------------- 3

II. Financial Ratios Analysis ----------------------- 3

III. WACC Analysis ----------------------------------- 9

IV. Working ceiling Management ---------------------- 13

V. Dividend Policy and Tax Treatment Impacts -------- 15

VI. Comments ----------------------------------------- 15

Assumptions and Notes ---------------------------- 17

I Background

Nike, Inc., a operate room corporation incorporated in 1968, and Reebok International Ltd., a mum corporation organized in 1979, are both spheric companies engaged in the design and merchandiseing of sports and fitness products. We allow for analyze their past five years financial reports to estimate who would be the preferred considerable company in the stock market.

Before we beat analyzing financial statements, we should keep in mind that our analyses are to mitigate understand the companys performance. Then based on it, we predict the next potential investing opportunity. And we will examine these two companies finished analyzing: profitability ratios, assets utilization ratios, capitalization ratios, sustainable growth rate, and market ratios.

II Financial ratios analysis

A. Profitability analysis

We first compare revenues, ROS, Gross margin, operating profit/sale, EBIT/sales, and EBITDA/sales for both companies.

Exhibit 1-1

Comparison of sales growth judge

Growth rates         2002         2001         2000         1999         1998

NIKE         8.13%         4.26%         5.49%         2.49%         -8.13%

REEBOK         4.51%         4.



45%         -1.19%         -10.07%         -11.50%

Nikes sales growth was negatively impacted by ane of its biggest domestic footwear distributors, but its transnational business is booming. Obviously, the U.S. athletic footwear market is crucial to Nike, and its working to find commutation distribution instead of the lost Foot Locker space. save at the same time, Nike is focusing on its huge international business and has been making big successes overseas.

Reebok, on the other hand, is in the opposite position. As a smaller company, and one look on rebuilding its brand and returning to glory, its focusing a great deal of energy on its U.S. footwear

Through...

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