Financial analysis paper on Nike, Inc.
Five SINGLE SPACED written pages that does not include title page, executive summary, bibliography,
and appendices.
Do not rely on the company’s annual report since that is nothing other than a marketing tool. The
primary emphasis of this analysis is finance complimented by accounting and economics. I want your
writing to be succinct, terse and exact and be no more than five (5) written pages not including title
page, executive summary, appendices, and bibliography. However, you can have as many appendices as
it takes to support your position.
First calculate your free cash flow for both your history and your forecast
Second calculate your EVA for your history and your forecast.
(These are not meant to be all inclusive but they should be of value together with your other
calculations.)
The EVA the weighted average cost of capital will be 8 percent
• Make sure your pro forma statements balance. For example, your end of year cash in the cash flow
statement must equal your cash and equivalent in your pro forma balance sheet.
PROCESS OF PERFORMING FINANCIAL ANALYSIS OF A PUBLIC COMPANY
GENERAL COMPONENT—No more than one paragraph describing the history of the
company.
ACCOUNTING COMPONENT
1. Obtain the most recent ten years of annual total sales (total revenue) data from the
firm’s financial history. In addition, use just the last three years for the firm’s
financial statement data:
a. Income Statement
b. Balance Sheet
c. Statement of Cash Flow
2. Derive common size statements for the income statement and the balance sheet NOT
the cash flow
a. Looking at trends in the data
b. Looking at variations in the same data as well as variations in the trends
ECONOMIC COMPONENT
3. How does the above relate to the industry that the company is in, i.e. need to perform
competitive economic analysis about the company:
a. Macroeconomic analysis—-is the company’s sales cyclical or counter cyclical for
example?
b. Industry analysis—market share, is the company’s sales growing, declining, or
staying the same? How is the company performing relative to its competition?
SWOT
4. STRENGTHS and WEAKNESSES should focus exclusively on the internal
characteristics of the firm’s finances.
5. The OPPORTUNITIES and THREATS should focus exclusively on the external
characteristics of the firm’s finances. FINANCE COMPONENT
The above should provide you the assumptions for deriving proformas for each of the three
financial statements (balance sheet, income statement, and statement of cash flow), and will
allow you to do your critical financial analysis of the firm. The pro forma, must be forecasted
out three years. Make sure you explicitly show your assumptions with your constructive critical
analysis. Finally, in your analysis you need to justify your conclusions, for example is the
company in a strong financial position, why or why not?
FORMAT FOR FINANCIAL ANALYSIS PAPER WRITEUP
I. Executive Summary
II. Introduction
One paragraph history of the firm
Problem Statement—–Is the firm financially viable and is it going to
grow?
III. Review of Literature
Newspapers
Periodicals
Etc.
IV. Structural Framework—Estimation of sales (revenue) forecast using your data
Regression Analysis
Alternative Estimation Techniques
Derivation of Proformas—Balance Sheet, Income Statement, Cash Flow
V. Analysis of your findings
Using your historical data from your financial statements and commonsize financial statements
Using your forecast data from your pro-forma financial statements
VI. Summary and conclusions
VII. Appendix
Tables
Graphs
Other
Requirements
1. Use the APA format—Full Documentation, which includes explicitly identifying
others works.
2. NO CUTTING AND PASTING
3. Title page
4. Executive Summary
5. Maximum of five (5) written pages, does not include title page, executive summary
or appendences—tables etc. go into appendix
6. Bibliography
7. Page numbers
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