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In: Finance

Select a firm that competes in an industry in which you are interested. Drawing upon published...

Select a firm that competes in an industry in which you are interested. Drawing upon published financial reports, complete a financial ratio analysis. Based on changes over time and a comparison with industry norms, evaluate the firm’s strengths and weaknesses in terms of its financial position. Looking at using Nike.

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Expert Solution

My company is Nike.

I will be looking on it from all three perspective of liquidity ratio and solvency ratio as well as profitability ratio and I will compare it along with the industry ratios.

When we look at the liquidity ratios of Nike, current ratio of nike is 2.1 whereas quick ratio of Nike is also 1.60 , the respective ratios for industry is 2 and 1.5 so Nike trying to compete in line with the industry when it comes to liquidity because it is having a better position in terms of overall total current asset in respect to total current liabilities and it has a healthy working capital and healthy cash in hands.

When we will look at the solvency ratio,debt to equity ratio is .38 where as debt to Capital ratio is .27, these ratios are looking better than industry ratio as it has a lower portion of debt in its overall capital and it is a healthy company from a long-term perspective.

finally we look at the profitability ratio the return on investment of this company is around 30% whereas the EBITDA Margin is around 15%, so it can be said that this company is also making a higher amount of profits and it is also having a growth in profits in comparison to the overall industry.

strength of the company can be seen that this company is continuously making profits and this is a healthy company in terms of high cash and this company is also having a high working capital.

When we will be looking at the weaknesses of this company the company is not able to make its assets to full use, because the Asset turnover ratio is not adequate and the company is not able to efficiently use its Assets and there are also a macro problem due to emergence of coronavirus.


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