SPM 365 Sport Finance Chapter 2 Assignment

Using the Nike financial statements provided in the text, Calculate the ten financial ratios discussed in the chapter. Explain what the ratio means and how it can be used.

1. Current ratio
2. Quick ratio
3. Total asset turnover ratio
   1. Note that Nikes income statement uses Revenues, instead, on its income statement.

4. Inventory turnover ratio
   1. *Note that Nikes income statement uses Cost of sales, instead, on its income statement.

5. Debt ratio

6. Interest coverage ratio

1. * On Nikes income statement, EBIT is not directly provided. It must be self-calculated by using the Gross Margin figure and subtracting the subsequent expenses not related to interest or taxes, which here represent the four lines/values immediately below Gross Margin.

7. Net profit margin
8. Return on equity
9. Market value

* The number of shares of outstanding common stock is computed by adding the numbers of Class A and Class B common stock outstanding presented in the shareholders equity section of Nikes balance sheet (178,000,000 + 692,000,000 = 870,000,000).

*** Price will be on the internet

10. Price-to-earnings ratio