History of Nike Inc.

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Blue Ribbon Sports (RBS) used to be the company that was renamed Nike and used to be established in 1964 by Bill Bowerman and Phil Knight (Frisch 03). Phil Night was an athlete and was trained by using Bill Bowerman who was a field and tune coach. Bill Bowerman wanted to improve the overall performance of his students by enhancing their shoes. Unfortunately, he was not successful. Phil, on the other hand, continued with his studies at Stanford University and bought his MBA. During his studies, Phil wrote a proposal to manufacture footwear in Japan to enhance the competitiveness of retailers against the greater brands. Phil’s idea never sincerely took off and he began the business of promoting shoes from Japan and selling them to the local consumers in the local market. Bowerman developed interest and they agreed to become equal partners. Despite a slow start of the business, they reached impressive sales by 1965 (Frisch 03).

In 1966, Phil and Bowerman opened their first retail outlet. In 1978, they renamed the company to Nike and two years later, they went public (Frisch 05). Nike opened several retail outlets and by the 21st century, the company had representation in over 170 countries and its logo was recognized worldwide. Since then, the company has continued to diversify its product line and businesses. Furthermore, the company’s success is attributed to endorsements by athletes such as Roger Federer, Michael Jordan and Mia Hamm.

Products and Services

Nike Inc has an array of products and services. The multinational designs and sells athletic accessories, footwear, services and equipment. The portfolio brands of the company include Hurley, Jordan Brand, Converse, and NIKE Brand. The products of the company are sold through its retail outlets, online and through licensed distributors around the world. As of 2016, NIKE focused on nine categories of product offerings. These include Action Sports, Golf, the Jordan Brand, Women’s Training, Sportswear, Men’s Training, NIKE Basketball, Running and Football. Under men’s training, there are the American football and baseball product offerings (Frisch 06). The company also markets products for recreational and athletic purposes such as tennis, wrestling, outdoor activities, volleyball and cricket among others. The footwear of the company is designed for use by a specific athlete. The products of NIKE are also used for leisure or casual purposes. Sports apparel are also sold by the company.

Under the NIKE brand Name, the company sells different accessories and equipment such as timepieces, gloves, golf clubs, eyewear, socks, bags and other equipment used in sports. Plastic products are also sold by the company to other manufacturers through its subsidiary, NIKE IHM (Frisch 06). The organization has also entered into license agreements that authorize other parties to manufacture and sell its various equipment, apparel and accessories such as training equipment and swimwear among others.

Accounting Practices

On the recognition of revenues, wholesale revenues are recognized are recognized by NIKE Inc once the rewards and risks of ownership are passed to the customer. This often occurs when a customer receives a product or on shipment depending on the destined country and the agreed terms with the customer. Revenues of retail stores are recorded at the time when sales are made. Also, provisions for miscellaneous claims and sales discounts are made at the time of sale. Cash and its equivalents have maturities of less than three months and are highly liquid. Inventory is stated at lower of market or cost and valuation is done of FIFO basis. The short-term investments of NIKE Inc include U.S treasury, Commercial paper and corporate debt securities. The debt security that the company wishes to hold are carried at amortized cost. Equipment, plant and property are put down based on their cost. The calculation of depreciation is on a straight-line basis for computer software, machinery and other long-term assets.

Stock Recommendation

Nike Inc is one of the most valuable and stable companies in the world. Since 2012, the company has experienced an upward trend in net sales. In 2016, there was a 6% increase in net sales due to higher revenues from China and North America (“Nike Inc. (NKE) | Financial Analysis And Stock Valuation”). Not considering the exchange rates, the revenues shot up due to an increase in the popularity in, running apparel Jordan Brand, and Sportswear. Reviewing the statement of financial position, NIKE Inc is relatively healthy. Despite a decline in the current assets, inventory, cash equivalents and current assets between 2015 and 2016, they have all increased in 2017 (“Nike Inc. (NKE) | Financial Analysis And Stock Valuation”). The cash flow statement further reveals that NIKE Inc can meets its short-term obligations. As a result, I would recommend for the buying of NIKE’s stock. Nike Inc pays dividends to its shareholders and also re-invests a portion of the profit into the company to increase its value and stability. If anything, the stock of NIKE Inc will continue to rise if it continues employing sound accounting and business policies that have seen it emerge as one of the largest multinationals in the world.

Works Cited

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“Nike Inc. (NKE) | Financial Analysis And Stock Valuation.” Stock Analysis On Net, 2017, https://www.stock-analysis-on.net/NYSE/Company/Nike-Inc.

Frisch, Aaron. The Story of Nike. Mankato, MN: Creative Paperbacks, 2011. Print.

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