Makayla Presgrave

Accounting 201-01
Berlin
11 March 2017
Nike's Versus Adidass Financial Statement Analysis

To compare each companys profitability, liquidity and solvency I used

the following ratios: price to earnings ratio to measure the ratio of
the market price of each share of common stock to the earnings per
share, which reflects investors' assessments of a company's future
earnings, current ratio to evaluate the companies liquidity and short-
term debt-paying ability, and debt to assets ratio to measure the
percentage of total financing provided by creditors, indicating the
degree of financial leveraging. It also provides some indication of the
company's ability to withstand losses without impairing the interests of
its creditors.

Nikes Ratios

2012
2013
2014
2015
2016

Price to Earnings ratio Current ratio Debt to Assets ratio

Nikes ratios were very consistent throughout the five years I chose to
analyze. For example, the results in the Price to Earnings ratio were all
in the 20s. The highest year being 2015 and tied in the lowest was
2013 and 2012. The same consistency was shown in the Current ratio.
All of the years numbers ranged from a high two value to a low three.
2015 had the lowest Current ratio, while 2013 had the highest with a
3.4. For the Debt to Assets ratio, 2016 was the highest with .09 and
2012 was the lowest with .02. Overall there were no big changes in the
data throughout the five years. It remained consistent, having no
severe gains or losses to the values.

The benchmark for Price to Earnings ratio is approximately 20 for a

consumer good item and depending on market conditions. Nike did not
fall below the set 20 ratio with the five years I looked at. The
benchmark for Current ratio listed under a consumer good is between
1.13-1.17. Nike exceeds this tremendously by having a low Current
ratio of 2.5 and a high one of 3.4. Lastly, the benchmark for a Debt to
Assets ratio is .55- .64 for a consumer good. Nike was well below this
with every year being below .10.

Adidass Ratios

2012
2013
2014
2015
2016

Adidas ratios also followed much consistency for the most part. The
Price to Earnings ratio had a low of 17.81, but then rose to 29.56 by
the end of 2016. One interesting number about the Price to Earnings
ratio was in the year of 2014, where it fell from 2013, but then in 2015
was able to recover and gain a few points. The current ratio varied
from 1.31 to 1.68. It has fluctuated throughout 2012- 2016, gaining
and losing points between the years, but staying consistent within the
1.30- 1.70 range. The Debt to Assets ratio had a low of .06 in 2013 and
a high of .13 in 2014, but managed to stay within these values.

The benchmark values I will be discussing are the same as the

benchmarks listed above in Nikes analysis. The benchmark for Price to
Earnings ratio is approximately 20 for a consumer good item in this
market. Adidas fell below this benchmark in 2012, and has stayed
above it since. The benchmark for Current ratio listed under a
consumer good is between 1.13-1.17. Adidas is well above this with
values ranging from 1.31- 1.68. The benchmark for a Debt to Assets
ratio is .55- .64 for a consumer good and Adidas is well below this with
its highest value being .13 and lowest .06.

Nike Versus Adidas

Nike showed more consistency than Adidas in the Price to Earnings

ratio, however Adidas had the higher ratio at the end of 2016. For the
Current ratio, Nike has a higher value greater than two for all five
years, whereas Adidas ranged from 1.30-1.70. Lastly, Nikes and
Adidas Debt to Assets ratios were very similar. They both ended 2016
with values of .07, however in the years 2015 and 2014, Adidas had
the highest ratios within its own company and compared to Nike, which
isnt concerning because this number is small and below the
benchmark, but does stick out as something to look at.