Case 14 Nike Cost of Capital Essay - 1143 Words

Nike, Inc.: Cost of Capital Case 14 A Case Brief Submitted to Submitted by In Partial Fulfillment of the Requirements for Date Submitted September 28, 2011 Summary This case highlights Kimi Ford, a portfolio manager with NorthPoint Group, a mutual-fund management firm. She managed the NorthPoint Large-Cap Fund, and in July of 2001, was looking at the possibility of taking a position in Nike for her fund. Nike stock had declined significantly over the previous year, and it appeared to be a sound value play. Nike had held an analysts’ meeting one week earlier to release the company’s fiscal results for 2001. Apparently Nike had an ulterior motive; the management wanted this opportunity not only to release their fiscal†¦show more content†¦In order to be more confident in her forecast, she asked her assistant to estimate Nike’s cost of capital. Nike’s Estimated Cost of Capital Ms. Ford’s assistant estimated Nike’s cost of capital to be 8.4%. This is based on four main assumptions. First, a single cost of capital for all of Nike’s various business segments will be sufficient, rather than using a business segment specific cost of capital. Seeing as footwear made up 62% of revenues, and that all the significant segments were sport related, the assistant felt that the risk factors were similar for all of the business segments. Next, since Nike was funded through both debt and equity, the WACC was used to calculate the cost of capital. Third, the cost of debt was estimated to be 4.3%. This was calculated by taking the interest expense for the entire year of 2001 and dividing it by Nike’s average debt balance. Tax adjusted, the cost of debt is 2.7%; this uses a tax rate of 38% based on a state tax of 3% and the U.S. statutory tax rate. Lastly, the CAPM was used to estimate the cost of equity. Using the current yield of the 20 -year Treasury bond as the risk-free rate, the compound average premium of the market over Treasury bonds as the risk premium, and the average of Nike’s betas from 1996 to 2000 as the beta, Nike’s cost of equity was estimated to be 10.5%. Validity of the Assumptions Single Cost of Capital The first assumption is thatShow MoreRelatedEssay about Cost of Capital Nike974 Words   |  4 Pagesï » ¿Case Analysis of Nike, Inc.: Cost of Capital Apparently, the issue of Nike’s case is to control and check the calculation cost of capital done by Joanna Cohen who is the assistant of a portfolio manager at NorthPoint Group. But I am willing to tell you that it can be a complex case in which we can doubt about sensitivity analysis done by Kimi Ford (portfolio manager) because her assumptions such as Revenue Growth Rate, COGS / Sales,  S A / Sales, Current Assets / Sales, and Current LiabilityRead MoreNike1217 Words   |  5 Pages13/3/2013 Nike, Inc. Cost of Capital 1 Discussion Questions †¢ What is the WACC and why is it important to estimate a firm’s cost of capital? What does it represent? Is the WACC set by investors or by managers? †¢ Do you agree with Joanna Cohen’s WACC calculation? Why or why not? If you do not agree with Cohen’s analysis, calculate your own WACC for Nike and be prepared to justify your assumptions. What mistakes did Joanna Cohen make in her analysis? Which method is best for calculatingRead MoreCase Study on Nike1252 Words   |  6 PagesCase Study Nike Introduction Good morning ladies and gentlemen and thank for taking the time to meet with us. Nike was founded on January 25, 1964 as Blue Ribbon Sports by Bill Bowerman and Philip Knight. The company officially became Nike, Inc. on May 30, 1978. Nike has various products which include footwear as well as other apparel that compliment the former. This accounts for 92 percent of the company’s revenue. The other 8 percent comes from equipment and non Nike brand products, such as ColeRead MoreNike Case696 Words   |  3 PagesNIKE INC. CASE 14 Philip Chen, Choco Huang, Ariel Chou, Matt Krieger In this report we analyzed Cohen’s approach in calculating WACC. After observing how Cohen derived his figures we came up with our own WACC, terminal value, and EPS. Cohen broke down his calculations into five parts 1) Single or Multiple Costs of Capital 2) Proportion of capital from debt and equity 3) Cost of Debt 4) Cost of Equity 5) WACC In part one; we disagreed with Cohen where he decided to value theRead More NIKEs Labour Troubles Essay1414 Words   |  6 PagesNIKEs Labour Troubles Nike publicizes itself as one of the leading industries in corporate responsibility. However, they do not comply with several human rights obligations overseas in countries like Thailand, Pakistan, China, Vietnam and Indonesia. In these countries, production facilities called sweatshops have been running for almost 35 years employing workers as young as 13 years of age. The conditions of these factories are adverse to say the least and deprive workers of the moral humanRead MoreAnalysis Of The Director Of Sustainable Sourcing Department Essay1381 Words   |  6 Pagesapparel production and 50% of global exports. External factors may drive manufacturers to relocate due to increasing labor cost, the transition will be unlikely in the next five years. While U.S. based companies are facing various business challenges, the associated risks from sourcing products from Asia can have detrimental effects on both financial and brand image as seen from Nike, Inc. and Mattel. Therefore, establi shing supplier credibility and developing strategies to mitigate supply chain risksRead MoreThe onesler1227 Words   |  5 Pagesinventory on account? D D) Inventory    XXXX       Accounts Payable       XXXX Question 5   of  50 Case 5.7 Sam s purchases $20,000 worth of goods on September 2. Terms of the purchase are 2/10 net 30 and FOB destination. The goods are shipped on September 3. The goods arrive at Sam s store on September 5. Shipping costs are $70. Sam pays for the goods on September 25. Refer to Case 5.7. Sam will debit inventory for which of the following amounts? 2070 Question 6   of  50 In which journalRead MoreNike Wacc Case Study2281 Words   |  10 Pagesimportant to estimate a firm’s cost of capital? Do you agree with Joanna Cohen’s WACC calculation? Why or why not? 2. If you do not agree with Cohen’s analysis, calculate your own WACC for Nike and justify your assumptions. 3. Calculate the costs of equity using CAPM, the dividend discount model, and the earnings capitalization ratio. What are the advantages and disadvantages of each method? 4. What should Kimi Ford recommend regarding an investment in Nike? 2 Case Overview Nike, Inc. NorthPoint GroupRead MoreFinancial Analysis: Nike Vs. Adidas4725 Words   |  19 PagesFinancial Analysis Nike Inc. vs. Adidas AG Submitted to: Dr. Ismail Gomaa By: Ghada Mahmoud Saafan 1/1/2010 CONTENTS Contents ........................................................................................................................................................................2 Methodology: ................................................................................................................................................................3 Nike Inc. ............Read MoreFinancial Analysis: Nike Vs. Adidas4709 Words   |  19 PagesComparative Financial Analysis Nike Inc. vs. Adidas AG Submitted to: Dr. Ismail Gomaa By: Ghada Mahmoud Saafan 1/1/2010 CONTENTS Contents ........................................................................................................................................................................2 Methodology: ................................................................................................................................................................3 Nike Inc. ...............

Through the Clouds free essay sample

Walking through the clouds, I can only see a few feet ahead, but I keep moving. A gust of wind, and now I am in open air. On either side, the ridge drops 2,000 feet. A loose stone defies my foot and I stumble, but Lauren reaches out and steadies me. We give each other nervous smiles, then turn our attention back to the trail. I remember losing my eyes to a similar path not long ago. I was a young girl, just 12 years old, trying to find her away through a maze of broken promises and harsh words. In a whirl of last-minute decisions and phone calls, I found myself trudging up a dirt road to a cabin at Robin Hood Camp while my parents settled their divorce. I slipped through the door of what would be my home for the next five weeks and glanced at the strange faces I would come to know so well. We will write a custom essay sample on Through the Clouds or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page It seemed then that I was only running away from the broken home I had left behind. I was partly right, but this place became my safe haven from the attorneys and courts of my parents divorce in more ways than one. *** We belt out a song to take our minds off the rocks below us. I yell from the inside of my belly and feel the exhilaration throughout my body. Never have I felt so alive. We know the summit is near, and our pace quickens with the anticipation. *** I had just gotten off the phone and was hurrying back to the cabin. I didnt want anyone to see me and kept my head low. The tears in my mothers voice when she told me she couldnt keep the house echoed in my mind. Out of the corner of my eye, I saw my friends lying on the lawn. I let my gaze absorb my feet and willed them to go faster. It was Lauren who noticed and ran to catch me. Among the many arms that wrapped around me in sympathy, all of the anguish and anger I had kept to myself was released and shared. I knew from then on that I would never have to face anything alone. *** Three years later find me hoisting myself up a sheer cliff on Mount Katahdin. This is the culmination of the five-week counselor-in-training program at Robin Hood, one of the most intense periods of my life. Each summer, I returned from camp rejuvenated and ready for a new year. It has served as my stronghold amid the turbulent circumstances at home, while still challenging my character mentally and physically. Lauren holds out her hand and helps pull me up over the final lip of the cliff. Shouting at the top of our lungs, we rejoice at the climb we have accomplished together. All those faces I have grown to love are creased with pride and laughter. Smiling, I turn and walk to the edge of the peak by myself. I am now above the clouds, and from here, I can see the world stretched out before me.

Macbeth Themes Essays (1789 words) - English-language Films

Macbeth Themes Peasants of the early sixteenth century are often pictured carrying a bundle of limbs tied with vines on their backs. This is a perfect metaphor for the events in Macbeth. Macbeth is one of many thanes, or limbs, bundled together. The thanes are united by the king, or the vine. Scotland, or the peasant, carries the bundle by the sweat of his brow. They carry the bundle for fires on cold nights, or wars, and to build homes, or castles, to protect them from the elements, or invaders. If the limbs are tied improperly, one limb may slip to the side and cause the peasant, or nation, to stumble or fall. If the limb slides completely out, the rest of the limbs may follow because the bundle is loose. Marriage is like a triangle. Each spouse makes up one of the leaning sides, and marriage the lower side. The three together are very strong, but to stand they all must be united. The longer a marriage is held the longer the bottom stretches, and the more dependent each person becomes on the other. If one side tries to stand on its own then the second will fall on the first as it tries to stand. This metaphor also excellently exemplifies the catastrophe that occurs in Macbeth as both Lady Macbeth and Macbeth try to separate. Macbeth is a eighteenth century play written by William Shakespeare. Using these two metaphors, the breakdown in the relationship between Lady Macbeth and Macbeth and between the king and the thanes and how they perfectly parallel each other because each is caused by Macbeth's will to be independent. According to Webster's dictionary, the archaic definition of independence is"competence" (1148). To be independent is not to be "subject to control by others" (Gove 1148). This means that independence is to be in control of ones decisions and to feel they are good decisions. Macbeth, on the other hand, feels independence is to not be subordinate to others like the king. To be independent, one must be strong. Inner strength, not physical strength, is needed. Inner strength is only accomplished by having a high self-esteem. Macbeth does not and must use others to reach for independence. Macbeth needs this strength: It [Macbeth] hurls a universe against a man, and if the universe that strikes is more impressive than the man who is stricken, as great as his size and gaunt as his soul may be he will fall. (Van Doren 217) According to Macbeth's ideas of independence and of strength, he is neither independent nor strong. He feels the need for both and thus allows nothing, including murder, to get into his way. Shakespeare opens Macbeth with the disorder being stabilized by the king and thanes. The thanes fought "rebellious arm ?gainst arm" to curb "his lavish spirit" (I, ii, 56- 7). Macbeth's stature increased to fill the space in the bundle of limbs opened by the death of the Thane of Cawdor for "what he hath lost, noble Macbeth hath won" (I, ii, 67). "When we first see him [Macbeth] he is already invaded by those fears which are to render him vicious and which are finally to make him abominable" (Van Doren 216).At the end of Act I, Lady Macbeth and Macbeth are discussing whether or not to assassinate the king (I, ii). Macbeth has not committed himself to this sin and to independence, he has not broken the commitatus bond that exists between the king and thane. Likewise, Macbeth's marriage is unstable as they argue, but their triangle is still together as they depend on one another. Lady Macbeth and Macbeth each experiment with external forces to gain independence from their spouse. Macbeth uses the witches, on which he becomes increasingly dependent. Lady Macbeth uses alcohol and Satan to "unsex" her and make her strong (II, ii, 1; I, v, 42). Both Macbeth and Lady Macbeth deny their dependence on their aid, and still require their spouse. Their self denial of their dependence makes them weak, and the more self denial the weaker they get. As a married couple, they are splitting away from each other: they are trying to turn their triangle of dependence into a open square of independence. The split between Macbeth and Lady Macbeth becomes apparent with the assassination of king Duncan. By the end of their arguing in the beginning of Act II, the two had not come to a final decision as to whether to kill the king or not (I, v,

The Negatives of Cloning essays

The Negatives of Cloning essays Human life is a creation, not a commodity, and should not be used as research material for reckless experiments, quoted George Bush. Clearly, the topic of cloning presents much controversy in the United States. Many believe immediate action should be taken to create nationwide cloning bans and ensure safety from the potential threats this procedure presents. The negatives of cloning include low success rates, numerous ethical issues, and regulation problems. The process of cloning carries many dangers throughout society including identity theft, control issues, and attempts to create a superior race. Most would agree that Hitlers vision of Germany, the perfect race, was unethical and immoral. Yet, if cloning was permitted it would be unlocking the door to this very same concept. Also, how can one possibly control who has the right to clone a human being. Would cloning be restricted to the patients family, or would the government be able to intervene? Another issue includes the possibility of identity theft. One could create a clone with the sole intent of using it as an assassin. The clone would have the exact DNA of its original parent; therefore, the parent could be falsely committed of the crime. Still, difficulties in cloning the organism itself might create several problems. Previous experiments and research in cloning have clearly shown low success rates. Dolly, the first successful cloned mammal, is considered the most infamous cloning achievement. The female sheep was born July 5, 1996 in Edinburgh, Scotland. While Dolly appears as a scientific marvel and displays cloning success, one usually does not see that she was the only survivor of 227 original eggs. As stated by BBC news, For every living clone, there are usually hundreds of failures. A staggering 97% of cloning attempts don't work. Furthermore, if one were to examine the animals which were cloned, they would notice the major ...

Forumwk7_research Assignment Example | Topics and Well Written Essays - 250 words

Forumwk7_research - Assignment Example However, the middle steps in formulating a hypothesis about the research question, deciding on the best way to present the findings, and the use of scholarly sources to authenticate the argument were a bit problematic. For example, in formulating the hypothesis, measurable goals were required in portraying the effectiveness of the research approach as measured against the research question. It was a bit problematic to formulate a hypothesis that could be measured considering my research question, which implied having both dependent and independent variables well illustrated in the formulated hypothesis. As Garbato explains, it is problematic to narrow down on issues to have a measurable hypothesis, and settling on the best way to present such findings. To achieve this end required more efforts and revisions.2 In the remainder of my degree, I need to carefully and intensively study research methods to understand how one can narrow down topics easily, and understand the best way to settle on a research topic based on scholarly evidence to support one’s arguments. Moreover, I will need more practice in writing research papers to perfect each of the above steps in ensuring a better understanding of the necessary steps in research

Cadbury Schweppes Essay Example | Topics and Well Written Essays - 750 words - 1

Cadbury Schweppes - Essay Example Aside from pivoting around these two elements, its responsible role is backed by CSR vision and strategy. Additionally, Cadbury Schweppes responsible role comes from the systems it has in place along with the company's pledge to live by its values. Through these steps the company strives to promote a brand that people love.1 The idea of promoting a brand that people love is fuelled by the idea that the more people love the brand, the more likely it is for Cadbury Schweppes to retain their position and do even better. In order to promote a brand that people love, the company listens to what people want. The company also learns from its past experiences with products that people easily take to. Through this simple process, Cadbury Schweppes has managed to successfully launch many products in the global market, as they know what people want.2 Acting responsibly is one aspect that Cadbury Schweppes continues to emphasize on. This aspect has permitted the company to place great value on its shareowners. This has allowed the company to put further thought into its CSR strategy that has Five Pillars. These include: Cadbury Schweppes continues to renew its commitments towards responsible growth of its business. Renewed commitments allows the company to be prepared for future CSR journey, which is termed as the company's 'Goals and Commitments on Sustainability.' Cadbury Schweppes has goals set for each of its Five Pillars for CSR strategy that is in sync with its approach to sustainability.3 The Problem Cadbury Faces Currently: Until recently, Cadbury Schweppes had little problem with its reputation. However, in June 2006, questions were raised regarding the ethical standards and social responsibility that the company preached for so long. According to the health department, Cadbury Schweppes has circulated stock that was contaminated4. This was discovered because of few cases of food poisoning that were traced back to Cadbury Schweppes. It was discovered that there was a leaking waste pipe that dripped some contaminants into Cadbury Schweppes' chocolate fudge. This is one of the ingredients used in many Cadbury products. After the investigation, it was determined that Cadbury Schweppes stood to lose 20 m because they had to recall the stock that was affected by the contamination5. Aside from the financial loss, there is also a risk of the company losing the trust of many customers. A Strategy to Counter Cadbury's Contamination Issue: Given that there are other top companies in the market today that have suffered breakdowns in ethical procedures, Cadbury Schweppes can recover from its position. It must be remembered that there are two things that Cadbury Schweppes stands to lose with its contamination issue; 20 m in circulated stock, and the trust of its customers. By already delaying recalling this circulated stock Cadbury has done itself damage. The strategy that Cadbury needs to adopt is: saving the company from long-term damage.6 Strategy Implementation: In order to save itself from long-term damage, Cadbury Schweppes

Introduction speech Essay Example for Free

Introduction speech Essay On September 30, 1993, a miracle that was unexpected happened. I’m going to tell you about an amazing and wonderful person; me!! I’ve known this person my entire life. Many people can consider me many things. Today I’ll tell you about my daughter, Vanessa, my family, and some of my hobbies. Now let me tell you about my daughter. My daughter Vanessa Rose was born on May 13, 2005, she weighed 7 pounds, she was 20 inches long, and born at 6:15 in the morning. She is now 2 Â ½ years old. I got her first name Vanessa from the little mermaid from the evil girl that took Ariel’s voice away from her and tried to steal her prince. I got her middle name Rose from the flower. It’s my favorite flower and it fit with her first name. Vanessa and I have a really close bond. We enjoy playing on her little computer, playing blocks, teaching her colors, teaching her the alphabet, and her numbers and shapes. She’s very active and loves to help clean, read books, color, and dance. There’s never a day that she sits still. My plans for Vanessa are simple, I want her to make the best out of her life, make mistakes in order to learn from them, go to school , graduate, get a career, get married, have kids, and die of a natural cause at a very old age. Now here’s a little bit about my family. I live with my mom, my stepdad, my little sister, and Vanessa. My mom, Kim, and I have a strained relationship, even though I’m her daughter, it’s very hard for her to understand that I am a mother and need to do things on my own without her help. But she’s still my mom and even though I don’t show that I appreciate her as much as she wishes I would, I do appreciate her for everything she’s done for me. My stepdad, Jim, and I have an odd relationship; even though he and my mom aren’t married he’s like another dad to me. Although my dad is still in the picture he’s not there for me as much as Jim is for me. I appreciate him a lot and thank him for being there for me. My little sister, Gabi, and I have a strong relationship. I’m always looking out for her and she always looks out for me. I trust I can tell her a secret and she won’t tell anyone else. She also can tell me secrets and she knows I won’t tell anyone either. She looks up to me as a role model and she always wants to be included. Even though she may bug me at times, I still love her to death and would go to the ends of the world and back. Now I’m going to tell you about some of my hobbies and what I like to do. A couple things I like to do are watch TV and movies, play on the computer, spend time with my daughter, spend time with my boyfriend, listen to music, text on my phone, and sleep. I like to watch TV and movies with my family and my boyfriend. On the computer I go on Facebook and MySpace everyday. I listen to all different types of music. What I listen to depends on the mood that I’m in. My favorite TV show is Family Guy because they’re really funny and my favorite characters are Stewie and Brian. My favorite movie is The Titanic because it’s really sad but romantic at the same time. It also shows that the worst of times can be changed into the best times of your life. In conclusion, today I’ve told you about my daughter, my family, and my hobbies. I’m an amazing and wonderful person. Many people can consider me many things and I hope that you can come to understand me better by hearing this.