Essay About Nike Cost Of Capital Case Study And Nike’S Stock

Nike Cost of Capital Case Study
[pic 1] De La Salle University- ManilaRamon V. Del Rosario Sr. College of BusinessManagement and Organizational Department  A Case Analysis Report onNIKE, INC.In partial fulfillment of the course requirements in FINANCIAL MANAGEMENT Submitted by: Janice GoRothi TruongJohn Kevin Sugue Submitted to: Prof. Edgardo C. Grey Jr.   January 28, 2016Executive Summary        Kimi Ford, the manager of the NorthPoint Large-Cap Fund, is weighing whether to invest in Nike’s stock.  Nike has experienced a negative year- decline in sales growth, profits and market share due to supply-chain issues and adverse effect of a strong dollar.          To boost revenue, Nike would develop more athletic-shoe products in the mid-priced segment and apparel lines.  It also commits to control and cut down its expenses. The market analyst reactions were mixed to Nike’s changes.  Kimi Ford developed her own discounted cash flow forecast for a clearer conclusion, and ask her assistant, Joanna Cohen, to estimate the cost of capital. Statement of the Problem        Ford needs to calculate the cost of capital to determine whether the investment in Nike should be made or ignored. AnalysisMultiple or Single Cost of CapitalAlthough Nike has a multiple business segments, we claim that it’s a right way to calculate all of the Nike’s business segments as a single cost of capital instead of multiple cost of capital.Non-Nike-branded products only contributed a tiny part of Nike’s revenue. There is no significant difference between the risk rates that every Nike’s segments stand because all of these segments are related to sport business.Also, with regards to the business activities such as marketing, distribution channel, etc., the management of Nike are set in the same state in all of these segments. They have the same marketing project, distribution channel, customer services, qualify guarantee, etc.