Annual Report Review Case Solution
Cash is King
The net operating cash flow of the last year was $4,680 million. Nike is making heavy investment in its fixed assets. It is pursuing a growth strategy. On the other hand, it is also acquiring short-term investments. The company is decreasing its long-term debt, while it also repurchases common stock. It has not declared any cash dividend for the year 2014 and 2015.
The net operating cash flow of the last year was $-44 million. The company has been making huge capital expenditure as well as it is acquiring new businesses. This means that the company is on an aggressive growth strategy, it wants to increase its market share and competitive advantage. Company has been using mix of debt sources and it issues stocks to gain more cash. The company pay dividend to its shareholders as opposed to Nike.
Current ratio is calculated by dividing the current asset over the current liabilities. For Nike, the current ratio decreased sharply in the year 2014 and then rose up again in the year 2015. Under Armour has an increasing current ratio with 3.13 in 2015. The current ratios of both the companies are favorable as they can pay their short term conveniently. Therefore, there is no possibility of bankruptcy.
|$ IN MILLIONS|
|Cost of sales||16,534||2057.766|
|Total selling and administrative expense||9,892||1497|
|COS AS A % OF SALES||54.03%||51.92%|
|SELLING & ADMIN AS A % OF SALES||32.33%||37.77%|
|INTEREST EXPENSE AS % OF SALES||0.09%||0.37%|
|OTHER EXPENSE AS % OF SALES||-0.19%||0.18%|
|INCOME TAX EXPENSE AS % OF SALES||3.05%||3.89%|
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