Professional Documents
Culture Documents
Net working capital is a company's current assets minus current liabilities. This amount is
used to determine the company's status in regards to working capital. If current assets are
more than current liabilities, then the company has positive working capital. If current
liabilities are more than current assets, then the company has a working capital deficit.
Currently, NIke's working capital is assets (15.465 billion) - liabilities (5.084 billion), which
equals $10.381 billion.
They're currently have a positive working capital. Two main goals of effective management
of working capital are the ability to manage the relationship between short-term assets and
short-term liabilities; and to continue a company's operational expenses. Companies must
make sure that they have enough cash to pay short-term debts. Nike's goals for managing its
working capital are to pay off any short-term liabilities as well as using it for upcoming
operational expenses. This could include building and/or purchasing new factories to make
more products. This can also include building/purchasing space for new Nike stores all
around the world.
Currently, Nike is actively engaged in having more of its own product being made directly
available to consumers through the Nike store. Investing in this project seems a natural step
for Nike to take, especially as it looks to do more business in developing markets.
Protectionism, in markets like Brazil, means Nike has to make its products more available to
private consumers through local Nike stores. Nike can also use its working capital for its
factories, whether that means opening new factories or finding ways to innovate the process
in which their products are made.
Net working capital is the difference between a firm’s current assets and its current
liabilities. With this you need to work to maintain the appropriate level of current assets such
as inventories, cash, and accounts. But you must also decide the amount and type of current
liabilities needed to finance the firm’s short term need for funds. So the two main goals of
effective management of working capital is these things, managing current assets as well as
Nike has been working to make these goals each year. They manage their assests as well
as decide the short term needs for the company. You can tell this by looking at their financial
portfolio and comparing it to other companies in turn and seeing how they have had a steady
success in income and short term financing. Looking at their gross profit margin and the
income vs their liabilities NIKE has been able to set up a great financial market and has been
able to keep it stable. They have established great trade credit. This helps when suppliers
ship materials etc arrive without having payment due at that exact time. Also NIKE has
created a brand name that is supportive of its investments as well as its own personal
accounts. People feel comfortable with the way NIKE handles their business. NIKE has been
able to have investors as their financial resources along with trade, the people who purchase
the goods, and the suppliers to the product. Because of these factors, NIKE has a great net
working and completes its two major goals of short term financing as well as managing
current assess. This is seen in comparisons of stock, financial documents, etc of NIKE and its
competitors.