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Write a 2 page essay on Financial Statement summary of your analysis.These ratios reveal the bottom line of the company and the returns it offers to its investors (Kieso et al. 2011). Profitability ra
Write a 2 page essay on Financial Statement summary of your analysis.
These ratios reveal the bottom line of the company and the returns it offers to its investors (Kieso et al. 2011). Profitability ratios show the general efficiency and performance of the company. Net profit ratios increased from 9.48% in 2012 to 9.76% in 2013 indicating an increase in profitability. It decreased from 9.76% in 2013 to 9369% in 2014 indicating a reduction in performance of the company. Generally, the company’s performance and efficiency, .its operations have fluctuated throughout the period. Compared to the industry, Nike is less profitable because its ratios are lower than those of the competitors.
This category of ratios shows how well a company is managing its liabilities. They also show how effectively a company is using its assets to generate revenues (Wahlen et al. 2010). The days sales outstanding decreased from 49days in 2012 to 44.9 days in 2012. This implies that Nike is profitable to convert its sales into cash quickly. In 2014, it increased to 45.1days from 44.9 days in 2013, implying a reduction in profitability due to slow conversion of sales into cash.
Inventory turnover increased to 7.72 in 2013 from 7.24 in 2012 meaning it used fewer inventories to generate more revenue. In 2014, it used more inventories to generate less revenue since inventory turnover reduced from 7.27 in 2013 to 7.04. Total asset turnover decreased in 2013 to 1.44 from 1.50 in 2012 and increased to 1.49 in 2014 from 1.44 in 2013. Nike is more efficient in its operations than the industry average. it uses fewer assets and inventories to generate more revenues unlike other firms in the industry. It also collects its receivable more quickly than the competitors (Kapil, 2011).
Debt ratios determine the long-term solvency of the company (Warren & Reeve, 2009). . The debt to equity ratio increased from 0.48 in 2012 to 0.58 in
