Nike and Adidas Comparative Financial Analysis Accounting Assignment

Nike and Adidas Comparative Financial Analysis Accounting Assignment

See the template and only the deliverable#1 need to be finished

1. Use SEC EDGAR (www.sec.gov) to download the three most recent Form 10-Ks for each company you have selected.

2. Use the Form 10-Ks and the financial statements along with any other information available online to obtain background information about each company and to assess each company’s business environment. Use a SWOT analysis to briefly analyze the competitive landscape for each company. The goal is to understand the overall business environment of each company so that you can assess its financial statements in a broader business context. Provide a summary of your findings in this deliverable. NOTE: See Financial Statement Analysis & Valuation, Appendix C, pages C-3 and C-4 for an example.

3. Use the Form 10-Ks to explore the financial statements of each company and familiarize yourself with their basics. Answer the following questions and include the answers in your deliverable: a. What accounting standards are used, U.S. GAAP, IFRS or other? b. What is the date of the most recent fiscal year-end? c. What is the relative proportion of short-term and long-term assets? d. What is the relative proportion of liabilities and equity? e. What is the return on assets (ROA) for the most recent year? f. Find each company’s audit reports. Who are the auditors? Are there any concerns raised in the reports?

4. Using the Excel worksheet provided separately, prepare a three-year common size balance sheet for each company and include a copy in your deliverable. Once you have completed the common size balance sheets, answer the following questions and include the answers in your deliverable:

a. What is each company’s largest asset category? Largest liability category?

b. What proportion of total assets is financed by owners (compare with total equity)?

c. What proportion of total assets is financed by nonowners (compare with total liabilities)?

d. Based on your review of the common size balance sheet for each company, what significant trends and changes did you notice? Why do you think they occurred? Financial Analyst New Hire Instructions and Training Program 6 Orange Dog Holdings NOTE: See Financial Statement Analysis & Valuation, Appendix C, pages C-22 and C23 for an example.

5. Using the Excel worksheet provided separately, prepare a three-year common size income statement for each company and include a copy in your deliverable. Once you have completed the common size income statement, answer the following questions and include the answers in your deliverable: a. What are each company’s major revenue items? b. What are each company’s major expenses? c. Which company is more profitable? d. Was each company more or less profitable when compared to the prior year? e. Based on your review of the common size income statement for each company, what significant trends and changes did you notice? Why do you think they occurred? NOTE: See Financial Statement Analysis & Valuation, Appendix C, page C-9 for an example.

6. For each company, use the most recent Form 10-K to determine the size and direction (cash source or use) of cash flows from operations, investing and financing, with the goal of understanding the target company’s pattern of cash flows and to form an opinion about the general strength of its cash flows. Answer the following questions and include the answers in your deliverable: a. What was each company’s cash flows from operations? Were they positive? b. Did the companies purchase new property and equipment (“capital expenditures”) during the year? c. Did the companies issue new debt during the year or was debt repaid? d. Did the companies issue new stock? e. Did the companies pay dividends? NOTE: See Financial Statement Analysis & Valuation, Appendix C, pages C-26 and C27 for an example. Summarize the result of your work in a formal deliverable before submitting it to the dropbox assigned in TritonEd. Use the ODH letterhead provided separately as the basis for formatting your deliverable. In addition, the Excel worksheets used for your calculations should be submitted in the same dropbox as the deliverable.

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