COLLAPSE Overall Rating: 1 2 3 4 5 1 2 3 4 5 Use the Internet to research an ann

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Use the Internet to research an annual report of a retail company. Then, imagine you are an investor or creditor and suggest the ratios that you believe would provide an investor or creditor with the most important information needed to make accurate predictions about the company’s financial condition. When analyzing a company, is it more important to compare the ratios to competitors or to the company’s previous history? Provide a rationale for your response. Note: You must provide a link or instructions to the researched report.

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Explanation / Answer

I have chosen the company “Nike Inc.”It manufactures athletic footwear and sport apparels.

For nice the profitability, liquidity and solvency ratio analysis are as the most significant indicators for financial performance analysis. Most importantly the value of working capital is important to understand the performance of the company. At the topmost Nike has effective working capital ratio. Working capital (current assert- current liabilities) is used to found operation and purchased inventory. The operations are then converted into sales and inventory. company’s decreasing current ratio indicates that the company invested in the business more than previous year which is good for the company`s future growth. earnings per share which is a profitability ratio is also an important indicator to investors as it shows that company has used their resources in effective and efficient ways to motivate investors to invest in company and also increasing confident of shareholders regarding the company.nike has been facing an increased earnings per share from the past few years. When it comes to comparing two companies in similar industry, the net profit margin is the good indicator for investors. The shareholders are more concerned about the net profits margin, because it shows how good the company is at converting revenues into profits, therefore Nike’s net profit margin is good for the shareholders and they more motivated to invest in Nike.

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