Working Capital Management Assignment

NATIONAL ECONOMICS UNIVERSITY
SCHOOL OF ADVANCED EDUCATION PROGRAMS
REPORT
Working Capital Management
CASE STUDY: ALLBIRDS

Group 6
Instructor: PhD. Tran Phi Long

Class: Advanced Finance 62B
Member: Truong Huy Thinh - 11207021
Ta Linh Chi - 11200625
Vu Tuan Dung - 11204905
Chu Hoang Minh - 11206061
Truong Le Thu Thuy - 11207114
Nguyen Hoang Long - 11205952
Hanoi - 10/2023
TABLE OF CONTENTS
1
TABLE OF CONTENTS
LIST OF TABLE
LIST OF FIGURES
PART 1: COMPANY BACKGROUND
1.1. Background
1.2. Products
1.3. General Environment
1.3.1. Economic
1.3.2. Sociocultural
1.3.3. Technology
PART 2: CASH MANAGEMENT ANALYSIS
2.1. Balance sheet analysis
2.2. Cash Flow Statement Analysis
2.2.1. Operating Cash Flow:
2.2.2. Investing Cash Flow
2.2.3. Financing Cash Flow
PART 3: INVENTORY MANAGEMENT ANALYSIS
3.1. Introduction to Inventory Management Systems
3.2. Strategies of inventory management employed by Allbirds:
3.3. Analysis of Allbirds’ 3-year Inventory Management:
3.4. Comparison to Competitor:
PART 4: ACCOUNT RECEIVABLE/ACCOUNT PAYABLE MANAGEMENT
ANALYSIS
4.1. Account receivable
4.2. Account payable
PART 5: WORKING CAPITAL ANALYSIS
5.1. Allbirds’ Working Capital Analysis
5.2. Allbirds’ working capital turnover
5.3. Liquidity
5.3.1. Current ratio
5.3.2. Quick ratio
5.3.3. Cash ratio
5.4. Profitability ratio
5.5. Cash Conversion Cycle
5.6. Leverage
5.7. Correlation with stock price
2
5.7.1. Stock price

5.7.2. Correlation between Allbirds’ Working Capital and Stock Price
PART 6: FORECAST LONG-TERM FINANCIAL STATEMENT & SHORT-
TERM CASH BUDGET
6.1. Long-term financial statement
6.1.1. Long-term Income statements
6.1.2. Long-term Balance Sheet
6.2. Short-term financial planning
3
LIST OF TABLE
Table Name of table Page

2.1.1 Allbirds’s Balance sheet in 2019-2020 12
2.1.4 Leverage ratio of Allbirds 2019-2022 21
2.2.1 Operating Cash Flow in 2019 - 2022 22
2.2.2 Investing Cash Flow in 2019 - 2022 23
2.2.3 Financing Cash Flow in 2019 - 2022 24
3.2 Allbirds’ Product Catalog Inventory 26
3.3 Allbirds’ Inventory Ratios 28
3.4 Nike and Industry Inventory Ratios 30
4.1 Account Receivable Ratios of Allbirds 34
4.2 Account Receivable Turnover of Allbirds, Nike and Apparel, 35

Footwear & Accessories
4.3 Account Payable Ratios of Allbirds 36
4.4 Number of factories of Allbirds 38
4.5 Account Payable Turnover of Allbirds, Nike and Apparel, 38

6.1 Income statement of Allbirds 2022-2025 57

4
6.2 Balance sheet of Allbirds 2022-2025 58
6.3 Percentage of Revenue in 4 quarters of Allbirds 59
6.4 Projected Quarter Income Statement in 2023 of Allbirds 60
6.5 Projected cash receipts of Allbirds 61
6.6 Inventory of Allbirds 61
6.7 Account Payable of Allbirds 62
6.8 Projected Cash Disbursement of Allbirds 62
6.9 Cash budget of Allbirds 62

5
LIST OF FIGURES
Figure Name of figure Page

2.1 Allbirds’s distribution in Balance sheets in 2019-2022 20
4.1 Account Receivable Turnover of Allbirds, Nike and Apparel, 36

4.2 Account Payable Turnover of Allbirds, Nike and Apparel, 39

5.1 Working Capital of Allbirds 41
5.2 Working Capital of Allbirds vs Nike 42
5.3 Working Capital Turnover of Allbirds 43
5.4 Working Capital Turnover of Allbirds vs Nike 44
5.5 Current Ratio of Allbirds 45
5.6 Current Ratio of Allbirds vs Nik3 46
5.7 Quick Ratio of Allbirds 47
5.8 Quick Ratio of Allbirds vs Nike 48
5.9 Cash Ratio of Allbird 49
5.10 Cash Ratio of Allbirds 50
5.11 Profitability Ratio of Allbirds 51
5.12 Cash Conversion Cycle of Allbirds 52
5.13 Cash Conversion Cycle of Allbirds, Nike and Apparel, 53

6
5.14 Debt to Equity Ratio of Allbirds 54
5.15 Stock price of Allbirds 55
5.16 Correlation between Allbirds’ Working Capital and Stock 56

Price
6.1 Forecasted Revenue of Allbirds 57

7
PART 1: COMPANY BACKGROUND
1.1. Background
Allbirds was founded in July 2015 by Tim Brown and Joey Zwillinger. Tim Brown is a
former soccer star in New Zealand and Joy Zwillinger is a biotech engineer and
renewables expert. In 2014 the Wool Industry in New Zealand funded a research grant
for Brown to develop a wool-based sneaker. He took his idea and used Kickstarter to
launch it. It was so popular that he raised over $100,000 in five days. After a successful
Kickstarter launch, Brown teamed up with Zwillinger. At this point, they began creating
their company processes and launched Allbirds officially in March 2016.
They started as a direct-to-consumer eRetailer with one shoe product offered. They have
since expanded their offerings. The vision always included sustainability and carbon
neutrality. The company has since earned some early recognition and accolades. In 2016
after their first style, the Wool Runner, made with super-fine merino wool, was launched,
Time Magazine crowned them “the world’s most comfortable shoes.” Their glowing
article was entitled, “The World’s Most Comfortable Shoes Are Made of Super-Soft
Wool”. The New York Times noted that they were becoming a mainstay in the
minimalist look of Silicon Valley. And in 2018, The New Yorker devoted two stories to
Allbirds, one of which emphasized its eco-friendly aspirations. And its newest product,
the Dasher – a performance running shoe – was named one of the 100 Best Inventions of
2020.
When they started, their goal was to create a brand new category of shoes made from
natural materials and via business processes that were sustainable and carbon neutral. In
addition to their transparent, sustainable business practices, they donate lightly used
Allbirds to SOLES4SOULS® to help individuals in need. Also, their recycled packaging
is its own innovation. They use 90% post-consumer recycled cardboard that serves as a
shoebox, shopping bag and mailer all in one. Additionally, while their stores were closed,
they continued paying the retail workers because they value their employees. They also
donated about $1million worth of shoes – about 10,000 pairs – to front line workers
during the pandemic.
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1.2. Products
Allbirds is a company that specializes in sustainable shoes and clothing made with
natural materials like merino wool and eucalyptus fiber. They offer a variety of shoes for
men and women, including sneakers, flats, and trainers. Some of their popular product
categories include:
● Casual shoes: These are made from merino wool and are available in a variety of
colors. They are designed to be comfortable for everyday wear.
● Performance shoes: This collection includes shoes that are designed to be rain-
ready, lightweight and breathable. They are made from a water-repellent material
and have a slip-resistant sole.
● Apparel: These are clothing made from natural materials like merino wool and
Tencel™ lyocell. Their clothing line includes t-shirts, sweaters, and jackets.
1.3. General Environment

1.3.1. Economic
The period from 2019 to 2022 has been marked by significant economic shifts,
challenges, and transformation on a global scale. During these years, the world
experienced a myriad of events and trends that shaped the economic landscape, including
trade disputes, a global pandemic, shifts in technology, and environmental concerns. This
essay aims to provide an overview of some of the key economic developments during this
period.
The trade tensions that began in 2018 between the United States and China continued to
affect the world economy in 2019 and 2020. Tariffs imposed by both countries had far-
reaching consequences, disrupting global supply chains, impacting businesses, and
leading to uncertainty in financial markets. These trade tensions created an atmosphere of
economic unpredictability and unease.
The most defining event of this period was undoubtedly the outbreak of the COVID-19
pandemic. It brought the global economy to a grinding halt as lockdowns and restrictions
were imposed to curb the spread of the virus. Many businesses faced severe challenges,
and some industries, such as travel and hospitality, were hit especially hard. Governments
around the world introduced massive stimulus packages to mitigate the economic impact
of the pandemic, leading to concerns about long-term fiscal sustainability.
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Environmental, Social, and Governance (ESG) factors gained prominence in the

corporate world during this period. Climate change concerns led to increased awareness
of sustainability and responsible business practices. Companies began to prioritize ESG
metrics and report on their efforts to reduce carbon emissions, use sustainable resources,
and support social causes. Investors started to incorporate ESG criteria into their
decision-making processes.
Inflation became a notable concern in many economies as demand outpaced supply and
shortages in essential goods occurred due to supply chain disruptions during the
pandemic. Central banks had to navigate the delicate balance between supporting
economic recovery and managing inflationary pressures.
Allbirds operates in a dynamic economic environment, and its business is influenced by a

wide range of economic factors, from consumer behavior and market dynamics to supply
chain challenges and international expansion opportunities. The company's emphasis on
sustainability and ethical practices also reflects its awareness of evolving consumer
expectations in a changing economic and sociocultural context.
1.3.2. Sociocultural
The period from 2019 to 2022 was marked by a multitude of sociocultural changes and
developments that reshaped the way we live, interact, and perceive the world. This essay
delves into some of the most prominent sociocultural trends and transformations during
these years, providing insight into the key forces that influenced our society.
The proliferation of digital technology and social media platforms continued to reshape
the way we communicate and connect with others. Social media became a powerful tool
for sharing information, mobilizing movements, and shaping public discourse. It allowed
individuals and organizations to amplify their voices and raise awareness about social and
political issues, as seen in movements like #BlackLivesMatter, #MeToo, and climate
activism led by Greta Thunberg.
The sociocultural landscape saw a notable increase in awareness and discussions

surrounding mental health. The stigma associated with mental health issues began to
erode, and more individuals sought help and support. This transformation was driven by
an array of factors, including the pandemic's impact on mental well-being and a growing
recognition of the importance of mental health care.
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Sociocultural conversations around diversity, inclusion, and equity gained momentum.

Issues related to race, gender, sexual orientation, and socioeconomic disparities were at
the forefront of public discourse. Movements and initiatives aimed at addressing systemic
inequalities and promoting inclusivity saw widespread support and called for meaningful
change.
Political polarization deepened in various parts of the world, with societies becoming
more divided along ideological and partisan lines. These divides were exacerbated by
events like contentious elections, public health debates, and cultural issues, leading to
challenges in finding common ground and fostering unity.
Growing concerns about climate change and environmental degradation led to increased
environmental consciousness. This period saw a surge in eco-friendly practices, a shift
towards sustainable consumer choices, and a push for policies and regulations that
prioritize environmental protection.
The COVID-19 pandemic forced a sudden and widespread transition to remote work.
This shift had a profound impact on the way we approach work and career. It offered
greater flexibility but also raised questions about work-life balance and the long-term
future of traditional office spaces.
By focusing on sustainability, ethics, and comfort while leveraging digital engagement,

Allbirds positions itself to meet the evolving demands and expectations of contemporary
consumers. Allbirds' ability to recognize and adapt to sociocultural trends has contributed
to its growth and relevance in the footwear industry.
1.3.3. Technology
The period from 2019 to 2022 witnessed a remarkable technological transformation that
reshaped our world in profound ways. This essay explores some of the most significant
technological trends and developments during these years, highlighting how they have
impacted various aspects of our lives.
AI and machine learning continued to advance, impacting everything from healthcare and
finance to customer service and manufacturing. The ability of machines to analyze vast
datasets and make predictions led to more personalized user experiences and improved
decision-making across industries.
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The fields of biotechnology and genomics made significant strides during these years.
CRISPR gene editing technology advanced, offering the potential to treat genetic diseases
and create designer organisms. The development of COVID-19 vaccines showcased the
power of biotechnology in addressing global health crises.
In the context of growing environmental concerns, the technology sector made substantial
contributions to the transition to renewable energy sources and the development of
electric vehicles. Advancements in battery technology, solar power, and wind energy
played pivotal roles in reducing carbon footprints.
The rise of technology raised concerns about data privacy and led to increased scrutiny
and regulation. GDPR (General Data Protection Regulation) in Europe and discussions
surrounding data privacy in the United States exemplify the sociocultural and legal
responses to technological advancements.
Allbirds strategically incorporates technology into various aspects of its business

operations, from manufacturing and supply chain management to e-commerce and
customer engagement. The company's commitment to sustainability aligns with
advancements in materials science and eco-friendly manufacturing techniques.
Furthermore, its use of data analytics, digital marketing, and online customer experience
enhancements reflects its awareness of and adaptation to evolving technological trends in
the retail industry.
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PART 2: CASH MANAGEMENT ANALYSIS
2.1. Balance sheet analysis

A balance sheet offers a momentary overview of a company's financial well-being at a
particular moment. It encompasses details regarding the company's assets, debts, and
ownership. By examining a company's balance sheets across different time periods, you
can discern shifts in its financial status and evaluate its fiscal achievements.
- Period 2019-2020:
Table 2.1.1: Allbirds’s Balance sheet in 2019-2020
Source of
Use of cash
2020 2019 cash (%)
$ % $ %
Assets
Cash and equivalents 126,551 74,312 52,239 43.11
Receivables 23,698 11,116 12,582 10.3
Inventories 59,222 44,327 14,865 12.27
Prepaid assets 4,669 4,110 559 0.46
Restricted cash 700 700
Other current Assets - -
Property, Plant and

23,301 16,583 6,718 5.54
Equipment
Goodwill and other
935 77 858 0.71
intangible assets
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Investment and
2,000 - 2,000 1.65
advances
Non current deferred
354 314 40 0.03
assets
Non Current Prepaid
2,457 2,838 381 0.31
Assets
Other noncurrent assets 156 206 50 0.04
Liabilities and shareholders’ equity
Payables 32,234 36,481 4,247 3.5
Current accrued
10,663 4,194 6,469 5.34
expenses
Current provisions 5,249 5,679 430 0.35
Pension & Other Post

Retirement Benefit 3,581 3,170 411 0.34
Plans Current
Current Debt And Capital
- -
Lease Obligation
Current Deferred
2,925 2,120 805 0.66
Liabilities
Other Current Liabilities - -
Long Term Debt And

Capital Lease - -
Obligation
Derivative Product
5,845 6,594 749 0.62
Liabilities
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Preferred Securities
204,049 102,302 101,747 83.96
Outside Stock Equity
Other Non Current
5,004 3,161 1,843 1.52
Liabilities
Capital Stock 5 5
Additional Paid in
64,548 57,322 7,226 5.96
Capital
Retained Earnings -92,016 -66,156 25,860 21.34
Gains Losses Not

Affecting Retained 1,956 -289 2,245 1.85
Earnings
Total 244,043 154,583 121,177 100 121,177 100
Leverage ratio 110.45% 105.9%
Unit: Thousand USD
- Period 2020-2021:
Table 2.1.2.: Allbirds’s Balance sheet in 2020-2021
Source of
Use of cash
2021 2020 cash (%)
$ % $ %
Assets
Receivables 10,978 23,698 12,720 2.42

15
Inventories 106,876 59,222 47,654 9.07
Prepaid assets 37,938 4,669 33,269
Restricted cash - 700 700 0.13
Property, Plant and

37,955 23,301 14,654 2.79
Equipment
Goodwill and other
622 935 313 0.06
intangible assets
Investment and
2,250 2,000 250 0.05
advances
102 354 252 0.05
assets
Non Current Prepaid
3,025 2,457 568 0.11
Assets
Other non current assets 107 157 50 0.01
Payables 30,726 32,234 1,509 0.29
Current accrued
46,243 10,663 35,580 6.77
expenses
Current provisions - 5,249 5,249 1

Retirement Benefit - 3,581 3,581 0.68
Plans Current
16

- -
Lease Obligation
Current Deferred
4,187 2,925 1,262 0.24
Liabilities
Long Term Debt And

Capital Lease - -
Obligation
Derivative Product
- 5,845 5,845 1.11
Liabilities
- 204,049 204,049 38.84
Other Non Current
10,269 5,004 5,265 1
Liabilities
Capital Stock 15 5 10 0.0019
Additional Paid in
533,709 64,548 469,161 89.31
Capital
Gains Losses Not

Affecting Retained 666 1,956 1,290 0.25
Earnings
Total 488,429 244,043 525,313 100 525,313 100
Unit: Thousand USD

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- Period 2021-2022:
Table 2.1.3.: Allbirds’s Balance sheet in 2021-2022
Source of
Use of cash
2022 2021 cash (%)
$ % $ %
Assets
Accounts receivable 9,206 10,978 1,772 0.62
Inventories 116,796 106,876 9,920 4.67
Prepaid assets 6,746 37,938 31,192 10.9
Restricted cash 632 - 632 0.22
Other current Assets 8,418 28,416 19,998 6.99
Property, Plant and

145,572 37,955 107,617 37.6
Equipment
Goodwill and other
133 622 489 0.17
intangible assets
Investment and
2,250 2,250
advances
1,001 102 899 0.31
assets
Non Current Prepaid
4,417 3,025 1,392 0.49
Assets
Other noncurrent assets 57 107 50 0.02

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Payables 12,245 30,726 18,481 6.46
Total tax payable - -
Current accrued
23,448 46,243 22,795 7.96
expenses
Current provisions - -

Retirement Benefit - -
Plans Current
10,263 - 10,263 3.59
Lease Obligation
Current Deferred
4,057 4,187 130 0.05
Liabilities
Long Term Debt And

Capital Lease 95,583 - 95,583 33.4
Obligation
Derivative Product
- -
Liabilities
- -
Other Non Current
- 10,269 10,269 3.59
Liabilities
Capital Stock 15 15
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Additional Paid in
559,106 533,709 5,397 1.88
Capital
Gains Losses Not

Affecting Retained -3,611 666 4,277 1.49
Earnings
Total 462,364 488,429 286,184 100 286,185 100
Unit: Thousand USD

Figure 2.1. Allbirds’s distribution in Balance sheets in 2019-2022
Total Assets and Shareholder's Equity: There was a substantial increase in total assets
and shareholder's equity from 2020 to 2021, indicating that the company experienced
growth and increased its asset base significantly during this time.
20
Total Liabilities: During this period, total liabilities initially increased from $8,055 in
2019 to $15,281 in 2020. However, it's important to note that the subsequent years
witnessed a decrease in total liabilities, indicating potential debt reduction or better debt
management by the company.
Use-of-Cash: In 2018-2019, retained earnings accounted for the highest proportion of

cash usage, representing 40% of total usage. In 2019-2020, the percentage allocated to
cash and cash equivalents increased to 33.59%. This suggests that the company needed to
allocate more funds to meet current obligations such as paying invoices and current
portions of long-term debts. The increase in inventory usage during this period may be
attributed to the impact of the COVID-19 pandemic, as Allbirds may have stockpiled
inventory. In 2020-2021, the highest use-of-cash proportion was associated with short-
term investments at 43.01%, indicating that the company chose to invest most of its cash
in short-term instruments, likely to protect capital and generate returns. In 2021-2022, the
highest use-of-cash proportion was in inventories (29.46%). The company explained that
this was influenced by supply chain issues and strong consumer demand, suggesting that
Allbirds purchased more goods than it sold during this period.
Source-of-Cash: In 2018-2019, the highest proportion of source-of-cash was accrued

liabilities. In 2019-2020, the company relied most on long-term debt as a source of cash.
This suggests that Allbirds borrowed money to cover the costs incurred during the
operational challenges posed by the COVID-19 pandemic. In 2020-2021, there was a
recovery in retained earnings, from a $191 million loss to a $3,179 million profit,
reflecting an improvement in the company's financial performance. Cash inflow between
2021 and 2022 was significantly influenced by additional paid-in capital (28.57%),
indicating that the company may have attracted more equity investments, which
contributed to revenue growth and offsetting operating expenses.
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In summary, the data reveals that Allbirds underwent a significant transformation in its
financial position over the four-year period. It experienced substantial growth in assets
and equity, while also reducing its liabilities. The company made strategic financial
decisions to adapt to the challenges posed by the COVID-19 pandemic, and these choices
are reflected in its cash utilization and sourcing patterns.
Table 2.1.4. Leverage ratio of Allbirds 2019-2022
2019 2020 2021 2022

Leverage ratio 105.9% 110.45% 18.72% 31.49%
The total-debt-to-assets ratio is a measure of the proportion of a company's assets

financed with borrowed money. Investors use this ratio to assess a company's ability
to meet its current debt obligations and generate returns on investments. The leverage
ratio of Allbirds increased from 105.9% in 2019 to 110.45% in 2020, indicating a
slight increase in debt reliance during that period. However, the subsequent years saw
a significant decrease in the debt-to-asset ratio, dropping from 110.45% in 2020 to
18.72% in 2021 and further to 31.49% in 2022. This trend suggests that Allbirds
became less reliant on debt financing, especially in 2021 and 2022. As a result,
during times of economic uncertainty, the reduced debt reliance of Allbirds,
particularly in 2021 and 2022, might make it a safer investment option compared to
previous years. This analysis highlights the importance of monitoring a company's
debt management practices to assess its financial stability and risk profile.
2.2. Cash Flow Statement Analysis

The cash flow statement is an important tool for investors and analysts to evaluate a
company's liquidity, solvency, and overall financial health. By examining the cash flow
statement, stakeholders can get a sense of how much cash a company is generating or
using and how it's being used
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2.2.1. Operating Cash Flow:
Table 2.2.1. Operating Cash Flow in 2019 - 2022
2019 2020 2021 2022

Net Income
from -14,527 -25,860 -45,370 -101,354
Continuing
Operations
Operating 10,624
1,127 -749 -
Gains Losses
Depreciation
Amortization 3,378 7,088 9,653 14,679
Depletion
Deferred Tax 3,038 -39 252 -898
Asset
Impairment - - - 17,716
Charge
Stock based
4,246 6,784 11,245 19,873
compensation
Other non-cash
41 49 49 49
items
Change in
2,739 -21,851 -37,303 -40,648
working capital
Adjustments to
reconcile net
14,569 -8,718 -5,480 10,774
income to net
cash
Unit: Thousand USD
Overall, Allbirds faced ongoing challenges in generating positive operating cash flow
during this period. The persistently negative cash flows can be attributed to the
company's net losses, increasing expenses, and a particularly noteworthy impact from
changes in working capital. Allbirds had negative net income from continuing operations
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in each of the four years, with the figures being -$1,085 million in 2019, -$16,113 million
in 2020, -$62,474 million in 2021, and -$91,583 million in 2022. This indicates that the
company was spending more on its core operations and expenses than it was generating
from its operating activities.
Allbirds' operating cash flow experienced fluctuations throughout the four-year period.
The company managed to generate positive cash flow in 2019 and 2022, despite reporting
net losses in those years. Positive non-cash items and, more importantly, favorable
changes in working capital components contributed to these positive cash flows.
Conversely, 2020 and 2021 saw negative operating cash flows, primarily due to
substantial negative changes in working capital. The ability to manage working capital
effectively will be crucial for Allbirds to maintain positive operating cash flows in the
future. While the company faced challenges in generating positive operating cash flow in
certain years, its ability to return to positive cash flow in 2022 demonstrates resilience
and potential for improvement.
2.2.2. Investing Cash Flow

Table 2.2.2. Investing Cash Flow in 2019 - 2022
2019 2020 2021 2022

Net PPE Purchase -13,122 -14,350 -24,181 -31,363
And Sale
Net Investment
- -2,000 -250 -
Purchase And Sale
Net Other Investing -2,056 69 -1,205 -929
Changes
Cash provided
(used) by investing -15,178 -16,281 -25,636 -32,292
activities
Unit: Thousand USD
Allbirds' investing cash flow data underscores the company's unwavering commitment to
capital investments and asset expansion throughout the four-year period. The pandemic's
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influence on these investments was particularly notable in 2020, with a more cautious
approach in light of the uncertainties. In 2020, Allbirds continued investing in property,
plant, and equipment, with a net outflow of -$14,350. The impact of the COVID-19
pandemic became evident in 2020, leading to a more cautious approach to investments.
The net investment purchase and sale showed a cash outflow of -$2,000, reflecting
pandemic-related uncertainties and a slowdown in investment activities. In 2021, the
effects of the pandemic persisted. Allbirds maintained its capital investments in property,
plant, and equipment with a net outflow of -$24,181. By 2022, Allbirds was still
grappling with the challenges brought about by the pandemic. A net outflow of -$31,363
in property, plant, and equipment purchases suggests a continued focus on asset
expansion. While the impact of the pandemic began to recede, uncertainties and supply
chain disruptions persisted, affecting the overall investing cash flow.
The negative cash flow from investing activities each year highlights Allbirds' substantial
capital allocation to acquire property, plant, and equipment and make other investments.
It also demonstrates the resilience in pursuing its long-term growth strategy despite
pandemic-related challenges.
2.2.3. Financing Cash Flow
Table 2.2.3. Financing Cash Flow in 2019 - 2022
2019 2020 2021 2022

Net Issuance
Payments of - - - 539
Debt
Net Common
- - 236,964 -
Stock Issuance
Net Preferred
24,971 101,749 - -
Stock Issuance
Proceeds from
Stock Option 588 440 5,879 3,952
Exercised
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Net Other
Financing 145 - -4,691 -910
Charges
Cash provided
(used) for
25,704 102,189 238.152 3,581
financing
activities
Unit: Thousand USD
Allbirds' financing cash flow data reflects a dynamic approach to capital management
during the four-year period. In 2019, Allbirds generated a net positive cash flow from
financing activities. This was primarily driven by the issuance of preferred stock,
amounting to $24,971, which allowed the company to raise significant capital for its
operations. The modest proceeds from stock option exercises and other financing charges
contributed to the positive financing cash flow. Notably, 2020 stood out as a year of
substantial equity financing, the company issued common stock, amounting to a
substantial $236,964. This likely indicated a significant round of equity financing,
providing significant capital for growth and development. In contrast, 2021 marked a
shift with minimal stock issuances and some financing challenges with a net cash outflow
of $1,424. By 2022, Allbirds generated a net positive cash flow from financing activities,
albeit a more modest one than in 2019 and 2020. The company issued common stock,
representing a cash influx, which may have been used for various purposes, including
expansion, research and development, and other operational needs.
In summary, Allbirds is proactive in securing the necessary capital for its operations and
growth plans. Allbirds' financing cash flow data reveals a dynamic approach to capital
management. The company has shown the ability to adapt its financing approach to align
with strategic priorities and external circumstances.
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PART 3: INVENTORY MANAGEMENT ANALYSIS
3.1. Introduction to Inventory Management Systems

Inventory management systems are software or tools that organizations use to efficiently
and effectively track, control, and optimize their inventory levels and related processes.
These systems are designed to help businesses keep track of their stock of goods, raw
materials, finished products, and other tangible assets. Inventory management systems
play a crucial role in ensuring that a company's supply chain runs smoothly and that its
inventory is maintained at an optimal level.
3.2. Strategies of inventory management employed by Allbirds:

Table 3.2: Allbirds’ Product Catalogue Sales
2022 2021 2020 2020/2021 2021/2022
Footwear 288,833 270,535 215,361 25.62% 6.76%
Casual shoes 254,173 248,892 204,615 21.64% 2.12%
Performance
34,660 21,643 10,746 101.41% 60.14%
shoes
Apparel 8,933 6,937 4,386 58.16% 28.77%
Footwear &
297,766 277,472 219,747 26.27% 7.31%
Apparel
Data-Driven Approach
The company's inventory management strategy is data-driven, relying on historical sales
data and probabilities to make informed decisions about inventory allocation. The key
principles of a data-driven approach include objectivity, empirical evidence, and a focus
on measurable outcomes. By leveraging data, organizations and individuals can make
more informed, evidence-based decisions, leading to improved efficiency, effectiveness,
and the ability to adapt to changing circumstances. Data-driven approaches are widely
used in various fields, including business, healthcare, science, and technology, to drive
better results and achieve specific goals.
27
Regional Diversification
Allbirds diversifies its product offerings by selling both footwear and apparel. While
footwear is the primary revenue generator, the company allocates inventory to apparel as
well. The allocation is smaller compared to footwear but shows steady growth, indicating
a strategic effort to expand the product range. By working with suppliers in different
regions, the company can reduce its exposure to risks such as natural disasters, political
instability, and trade disputes. This approach also helps Allbirds reduce lead times and
transportation costs.
Supply Chain Transparency and Traceability

Allbirds diligently maintains strong, respectful, and resilient relationships with its
suppliers to drive innovation and minimize environmental impact within its relatively
compact supply chain. The company achieves this by curating a meticulously controlled
product range, allowing for the upkeep of a compact and interconnected supply chain.
Allbirds ensures that all Tier 1 suppliers actively participate in their social audit and
environmental initiatives. As of 2022, they have commenced engagement with their most
critical Tier 2 suppliers, with the ultimate objective of encompassing 100% of these
strategic Tier 2 suppliers within their social audit and environmental programs.
The company has successfully mapped 100% of both its Tier 1 and Tier 2 suppliers.
Their overarching ambition is to extend this thorough mapping to encompass all tiers of
their supply chain by the year 2025.
3.3. Analysis of Allbirds’ 3-year Inventory Management:
Table 3.3: Allbirds’ Inventory Ratios

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ALLBIRDS
Time 2019 2020 2021 2022
Inventory 44,327 59,222 106,876 116,796
COGS
(thousand $) 94,839 106,555 130,810 168,138
Inventory
turnover 2.14 1.80 1.22 1.44
Inventory
conversion
period 170.60 202.86 298.22 253.54
Cash
conversion
cycle 60.62 140.82 226.92 238.25
Allbirds’ inventory management has been a topic of discussion in the industry. According
to the company’s 10-K filing for the year ended December 31, 2021, Allbirds is a global
lifestyle brand that innovates with naturally derived materials to make better footwear
and apparel products in a better way, while treading lighter on our planet. The company
has achieved its rapid growth through a digitally-led vertical retail distribution strategy.
By serving consumers directly, Allbirds cuts out the layers of costs associated with
traditional wholesalers, creating a more efficient cost structure and higher gross margin.
The inventory turnover ratio is a measure of how efficiently a company is managing its
inventory.
Inventory Turnover = Cost of Goods Sold (COGS) / Average Inventory in Period
Allbirds’ inventory turnover ratio has been decreasing over the years, which indicates
that it is taking longer for the company to sell its inventory. In 2019, the inventory
turnover was 2.14 times, indicating that Allbirds sold and replaced its inventory
approximately 2.14 times during.
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This turnover decreased to 1.80 in 2020, marking a 15.90% decrease, which suggests a
slowing down of sales relative to the previous year. In 2021, the turnover further declined
to 1.22, a significant 31.97% decrease from the previous year. This could indicate
inventory management challenges or a reduction in demand. However, in 2022, there was
an improvement with the turnover increasing to 1.44, which represents a 17.62% increase
over the previous year. This may signify a recovery or improved inventory management.
The inventory conversion period (ICP) is the average number of days it takes for a
company to convert its inventory into sales. Allbirds’ ICP has been increasing over the
years, which means that it is taking longer for the company to convert its inventory into
sales.
Inventory conversion period = (Inventory / COGS) * 365

In 2019, the inventory conversion period was 170.60 days, indicating that, on average, it
took Allbirds around 171 days to convert its inventory into sales.
This period increased to 202.86 days in 2020, which is an 18.91% increase compared to
the previous year, suggesting slower inventory turnover.
In 2021, the conversion period further extended to 298.22 days, representing a 47.00%
increase from the previous year. This increase could indicate potential inefficiencies in
the supply chain or a buildup of excess inventory.
In 2022, the conversion period decreased to 253.54 days, which is a positive 14.98%
change from the previous year, suggesting a more efficient inventory conversion process.
The cash conversion cycle (CCC) measures how long it takes for a company to convert
its investments in inventory and other resources into cash flows from sales.
CCC=DIO+DSO−DPO
30
where:
DIO = Days of inventory outstanding
DSO = Days sales outstanding
DPO = Days payables outstanding
Allbirds’ CCC has been increasing over the years, which indicates that it is taking longer
for the company to convert its investments in inventory and other resources into cash
flows from sales. In 2019, Allbirds had a CCC of 60.62 days. This relatively short CCC
suggests that the company was efficient in managing its working capital during that year.
A shorter CCC typically indicates that Allbirds was able to convert its inventory into cash
quickly, which is beneficial for its liquidity and cash flow.
In 2020, Allbirds' CCC significantly increased to 140.82 days. This was a substantial
jump, indicating that the company took longer to convert its investments in inventory into
cash.
The increase in CCC could be due to various factors, such as slower sales, disruptions in
the supply chain, or changes in inventory management practices.
In 2021, the CCC continued to rise, reaching 226.92 days. This suggests that the
company was facing more significant challenges in working capital management.
The prolonged CCC may have been associated with the impact of the COVID-19
pandemic, global supply chain disruptions, or changes in consumer demand.
In 2022, the CCC increased even further to 238.25 days. This indicates that Allbirds' cash
was tied up for an extended period during this year.
The continuing rise in CCC could be a cause for concern, as it may result in increased
financing costs and could affect the company's overall financial health. Overall, Allbirds’
inventory management has been deteriorating over the years as evidenced by decreasing
inventory turnover ratio, increasing ICP and CCC.
Allbirds has a higher CCC (Cash Conversion Cycle) than the overall market, indicating
that the company is pursuing a conservative working capital management strategy by
retaining working capital to prepare for business restructuring in the future. This aligns
with the business downturn that Allbirds is currently experiencing, as they aim to
31
reevaluate customer needs to improve their products. Therefore, retaining working capital
is a necessary activity.
3.4. Comparison to Competitor:

Table 3.4: Nike and Industry Inventory Ratios
Nike Industry
Time 2020 2021 2022 2020 2021 2022
Inventory 7,367,000 6,854,000 8,420,000
COGS 21,162,000 24,576,000 25,231,000
Inventory turnover 2.87 3.59 3.00 8.26 7.66 8.26
Inventory conversion
period 127.07 101.79 121.81 44.19 47.65 44.19
Cash conversion
cycle 115.12 96.25 109.70 37.87 33.23 35.61
Inventory Levels:
Allbirds had considerably lower inventory levels compared to Nike throughout the years.
Allbirds' count remained relatively small, increasing from 44,327 in 2019 to 116,796 in
2022. In contrast, Nike's inventory was significantly higher, ranging from 6,854,000 in
2020 to 8,420,000 in 2021. Nike's inventory levels were consistently larger, reflecting the
scale and global presence of the company.
Inventory Turnover:
Allbirds consistently had a lower inventory turnover rate than Nike. Allbirds' turnover
ranged from 1.22 to 2.14, with an improving trend, while Nike's turnover ranged from
2.87 to 3.59, indicating a higher rate of inventory turnover. Nike's higher turnover
suggests that they are selling and replenishing their inventory more frequently than
Allbirds.
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Inventory Conversion Period:
Allbirds had a longer inventory conversion period compared to Nike in all years. Allbirds'
conversion period ranged from 170.60 to 298.22 days, while Nike's ranged from 96.25 to
127.07 days. Nike's shorter conversion period implies a more efficient inventory
conversion process compared to Allbirds.
Financial Performance:
Cost of Goods Sold (COGS): Nike's COGS was significantly higher than Allbirds,
reflecting the scale and revenue of the two companies. Nike's COGS ranged from $21.16
billion in 2019 to $25.23 billion in 2021, while Allbirds' COGS ranged from $94.84
million in 2019 to $168.14 million in 2022.
Cash Conversion Cycle: Both companies had positive cash conversion cycles, but
Allbirds generally had a shorter cycle. Allbirds' cash conversion cycle ranged from 60.62
to 238.25 days, while Nike's cycle ranged from 96.25 to 115.12 days.
A shorter cash conversion cycle indicates that Allbirds was able to convert inventory into
cash more rapidly, which can be seen as a positive aspect of their financial performance.
The declining inventory turnover in 2020 and 2021 is a concern, as it indicates that
Allbirds may have had issues with managing inventory efficiently, which could lead to
increased holding costs.The significant improvement in inventory turnover in 2022 is a
positive sign, as it suggests that the company is addressing some of these issues and
selling its products more frequently. The inventory conversion period, on the other hand,
increased significantly in 2020 and 2021, indicating that inventory was taking longer to
be converted into sales, resulting in increased carrying costs and reduced cash flow.
The reduction in the conversion period in 2022 is a positive development, showing that
Allbirds is making progress in selling inventory more quickly. Overall, these figures
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indicate that Allbirds faced challenges in managing its inventory efficiently in 2020 and
2021, but there have been positive improvements in 2022. The company should continue
to monitor and optimize its inventory management practices to maintain the positive
trend in inventory turnover and conversion period and ultimately improve its financial
status.
Allbirds is a smaller company compared to Nike, and this is reflected in the vast
difference in inventory levels, COGS, and financial scale. Nike generally had a higher
inventory turnover rate and a shorter inventory conversion period, indicating more
efficient inventory management. Allbirds had a shorter cash conversion cycle, suggesting
they were more efficient in converting inventory into cash. Nike's inventory levels and
COGS were significantly larger due to the company's global reach and product diversity.
Nike had a higher turnover rate, reflecting its ability to manage a large inventory
efficiently. Allbirds had a shorter cash conversion cycle, indicating efficient cash flow
management in a smaller-scale operation.
PART 4: ACCOUNT RECEIVABLE/ACCOUNT PAYABLE MANAGEMENT

ANALYSIS
4.1. Account receivable

Table 4.1. Account Receivable Ratios of Allbirds
2019 / 2020 / 2021 /
Time 2019 2020 2021 2022 2020 2021 2022
Accounts
receivable 2,541 4,371 10,978 9,206 72.02% 151.16% -16.14%
Net revenue 193,673 219,296 277,472 297,766 13.23% 26.53% 7.31%
Receivables
turnover 76.22 50.17 25.28 32.34 -34.18% -49.62% 27.97%
Average 4.79 7.28 14.44 11.28 51.92% 98.50% -21.86%
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collection
period
Unit: thousand USD
source: Consolidated financial statement of Allbirds (2019-2022)
Accounts receivable represent the sums owed to the company by its customers. In 2019,
the company reported $2,541 in accounts receivable. Over the following years, we
witnessed a substantial increase. By 2021, accounts receivable had surged to $10,978,
marking a staggering 151.16% increase. However, in 2022, the company managed to
reduce accounts receivable to $9,206, a decrease of 16.14%. This reduction signals a
commendable effort to streamline collections.
In 2019, the company's receivables turnover was 76.22, indicating a relatively quick
collection process. However, in subsequent years, this metric deteriorated. By 2021, it
had dropped to 25.28, suggesting a significant delay in collections. The company
reversed this trend in 2022, with the receivables turnover increasing to 32.34, indicative
of improved collection efficiency. The average collection period is the average number of
days it takes for a company to collect payments from its customers. In 2019, it was a
mere 4.79 days, reflecting efficient collections. However, this number increased over the
next two years, peaking at 14.44 days in 2021. This lengthening of the collection period
is concerning, as it signifies delayed cash inflows. Nevertheless, there was a positive
turnaround in 2022, with the average collection period dropping to 11.28 days, indicating
an improved ability to collect payments in a timelier manner.
Comparison with other competitors and industry

Table 4.2. Account Receivable Turnover of Allbirds, Nike and Apparel,
Time 2020 2021 2022
Allbirds 50.17 25.28 32.34
35
Nike 13.61 9.98 10.01

Industry 9.61 11.17 10.05
source: YahooFinance & CSIMarket
Figure 4.1. Account Receivable Turnover of Allbirds, Nike and Apparel,
Allbirds demonstrated exceptional efficiency in 2020 but experienced a significant drop

in 2021 before recovering in 2022. This fluctuation may be due to various factors, such as
changes in credit terms or customer behavior. Nike, on the other hand, maintained a
lower but consistent receivables turnover over the three years. In 2020, it was 13.61, and
this decreased slightly to 9.98 in 2021 but remained stable at 10.01 in 2022. These
numbers suggest that Nike's collection process was not as rapid as Allbirds in 2020 but
improved in 2022. The industry's receivables turnover was 9.61 in 2020, showing lower
efficiency in collecting payments compared to both Allbirds and Nike. However, the
industry's turnover improved to 11.17 in 2021 and then settled at 10.05 in 2022.
4.2. Account payable

Table 4.3. Account Payable Ratios of Allbirds
Time 2019 2020 2021 2022 2019 / 2020 2020 / 2021 2021 / 2022
Accounts Payable 29,819 20,236 30,726 12,245 -32.14% 51.84% -60.15%
36
COGS 94,839 106,555 130,810 168,138 12.35% 22.76% 28.54%

Payables turnover 3.18 5.27 4.26 13.73 65.56% -19.15% 222.53%
Payables conversion
period 114.76 69.32 85.73 26.58 -39.60% 23.68% -69.00%
Unit: thousand USD
Source: Consolidated financial statement of Allbirds (2019-2022)
Accounts Payable represents the amount the company owes to its creditors and suppliers.
In 2019, the company had an Accounts Payable balance of $29,819, which decreased to
$20,236 in 2020, indicating a 32.14% reduction. This could be a result of improved cash
management or renegotiating payment terms with suppliers. However, in 2021, the
company's Accounts Payable increased to $30,726, showing a 51.84% rise compared to
2020. This may suggest increased purchases on credit or delayed payments. In 2022, the
Accounts Payable balance decreased dramatically to $12,245, marking a 60.15%
reduction from the previous year. This could signify the company's efforts to manage its
payables more efficiently.
Payables Turnover is a measure of how quickly a company pays off its suppliers. It is
calculated by dividing the COGS by the average Accounts Payable. In 2019, the Payables
Turnover was 3.18, indicating that the company paid off its suppliers roughly three times
during the year. This ratio improved in 2020, reaching 5.27, reflecting more efficient
management of payables. However, in 2021, the Payables Turnover declined to 4.26,
suggesting that the company was taking longer to pay off its creditors. In 2022, the ratio
significantly increased to 13.73, indicating a substantial improvement in the company's
payables management, possibly resulting from a concerted effort to reduce outstanding
payables. In 2019, the Payables Conversion Period was 114.76 days, indicating that, on
average, the company took over three months to settle its payables. This period improved
significantly in 2020, dropping to 69.32 days, suggesting quicker payment to suppliers.
37
However, in 2021, the Payables Conversion Period increased to 85.73 days, indicating a
slower pace of settling payables. In 2022, the conversion period dropped dramatically to
26.58 days, reflecting a substantial improvement in efficiency, possibly driven by a focus
on managing payables more effectively.
Reason for the change: The decrease in the numbers of suppliers

Besides the increase in Cost of goods sold due to market and economic factors, a main
reason why Allbirds' Payable Turnover ratio is high is the large reduction from the
Account Payable ratio (fall 60.15%). Allbirds receives goods from manufacturers in
regions around the world. In 2020, Allbirds has 4 partners in Vietnam to produce
footwear, 2 partners in China and 1 partner in Central America. By 2022, Allbirds has
been reduced to 1 partner in Vietnam, 1 partner in China and 4 partners in Central
America. Although the number of partners at Central America has increased
significantly, the company has limited sales activities to the Appareal category. The
reduction of 3 partners in Vietnam, where the Foorwear category - the company's main
product - is the reason why the company's Account Payable index decreased
significantly.
Table 4.4. Number of factories of Allbirds

Weight of sourcing
Sourcing Product Number of factories
volume
country sourcing
2020 2021 2022 2020 2021 2022
Vietnam Footwear 3 2 1 100% 100% 100%
China Apparel 2 1 1 70% 45% 25%
Central America Apparel 1 2 4 30% 55% 75%
source: sec.gov
Comparison with other competitors and industry
Table 4.5. Account Payable Turnover of Allbirds, Nike and Apparel,
38
2020 2021 2022

Allbirds 5.27 4.26 13.73
Nike 9.41 8.67 7.51
Industry 8.24 7.75 8.13
source: YahooFinance & CSIMarket
Figure 4.2. Account Payable Turnover of Allbirds, Nike and Apparel,
In 2020, Allbirds had a Payables Turnover Ratio of 5.27, while Nike's ratio was 9.41. In
2021, both Allbirds and Nike experienced decreases in their Payables Turnover Ratios.
Allbirds' ratio dropped to 4.26, while Nike's ratio decreased to 8.67. Despite the decline,
Nike maintained a higher level of efficiency in managing accounts payable during this
year. The most significant shift occurred in 2022. Allbirds witnessed a substantial
improvement in its Payables Turnover Ratio, which surged to 13.73. The industry as a
whole maintained a Payables Turnover Ratio of 8.24 in 2020. In 2021, the industry's ratio
decreased to 7.75, reflecting a modest decline in the efficiency of payables management
across the sector. However, in 2022, the industry experienced a slight recovery, with the
ratio increasing to 8.13, although it remained below the 2020 level.
39
40
PART 5: WORKING CAPITAL ANALYSIS
5.1. Allbirds’ Working Capital Analysis

Figure 5.1. Working Capital of Allbirds
Unit: thousand USD

Allbirds’ working capital was $82,921 in 2019, indicating that it had sufficient short-term
assets to cover its immediate liabilities. In 2020, the company significantly improved its
working capital to $160,188. This increase of nearly 93% shows that Allbirds managed
its short-term resources more efficiently. This trend continue in 2021 when the working
capital reached $363,212. This substantial increase of 126% indicates that Allbirds not
only met its short-term obligations but also had a surplus for investment or other strategic
purposes. In 2022, while there was a slight decrease in working capital to $258,922, it
remained at a healthy level. This decrease could be attributed to various factors such as
changing market conditions, investment decisions, or changes in the company's financial
structure.
41
Figure 5.2. Working Capital of Allbirds vs Nike
Unit: thousand USD

Source: Consolidated financial statement of Allbirds (2019-2022), YahooFinance
Both Allbirds and Nike have shown positive working capital growth over the four-year
period. Allbirds demonstrated a growth rate of approximately 19.76%, while Nike had a
growth rate of about 19.24%. This indicates that both companies managed their short-
term resources effectively and improved their capacity to cover immediate obligations
and operational expenses. However, it's important to note that Nike's working capital
figures are significantly larger than Allbirds'. Nike's working capital in 2019 was
$8,659,000, which was more than 100 times that of Allbirds. Nike's larger working
capital reflects the company's extensive operations and robust financial resources. This
allows Nike to manage a higher level of short-term assets and liabilities, but the growth
rate indicates a healthy improvement in its financial efficiency over the period.
5.2. Allbirds’ working capital turnover

42
Figure 5.3. Working Capital Turnover of Allbirds

In 2019, with a working capital turnover of approximately 2.33, Allbirds generated $2.33
in revenue for every dollar of working capital. In 2020, the working capital turnover
decreased to around 1.37. This suggests that, in 2020, the company was less efficient in
using its working capital to generate revenue compared to the previous year. This trend
keep continue in 2021 when the working capital turnover dropped significantly to about
0.76, indicating a substantial decrease in efficiency in working capital utilization.
However, in 2022, the working capital turnover improved to about 1.15, but it was still
lower than the 2019 level.
These fluctuations suggest that the company should focus on optimizing its working
capital utilization to ensure it can efficiently cover short-term obligations while
generating revenue. Monitoring this ratio and making adjustments as needed is essential
for maintaining a healthy and efficient financial operation, which, in turn, contributes to
overall financial success and stability.
Figure 5.4. Working Capital Turnover of Allbirds vs Nike

43

Nike, on the other hand, started with a working capital turnover ratio of 1.18 in 2019,
indicating lower efficiency in utilizing working capital compared to Allbirds in the same
year. However, Nike experienced a significant improvement in 2020, with a ratio of 3.05,
indicating a substantial increase in efficiency. This high efficiency was maintained in
2021 and 2022.
Allbirds appeared to have experienced a challenging period between 2020 and 2021, as
seen by the significant drop in working capital turnover. Meanwhile, Nike displayed a
remarkable improvement in 2020, signifying a strategic shift that led to a highly efficient
use of its working capital. This strong performance was maintained in subsequent years,
indicating that Nike successfully implemented and sustained changes in its financial
operations.
5.3. Liquidity
5.3.1. Current ratio
Figure 5.5. Current Ratio of Allbirds
44
In 2019, the current ratio was 2.61. This indicates a healthy financial position in the short
term. In 2020, the current ratio increased to 3.93, showing an improvement in Allbirds'
ability to meet its short-term obligations. In 2021 and 2022, the current ratio continued to
rise, reaching 6.18. The increasing current ratio over these years suggests that the
company was able to consistently improve its short-term liquidity and its capacity to meet
immediate financial obligations. A higher current ratio generally indicates a healthier
short-term financial position, which can provide a cushion against unexpected financial
challenges and support ongoing business operations.
45
Figure 5.6. Current Ratio of Allbirds vs Nike
Allbirds consistently maintained a higher current ratio compared to Nike over the four-
year period. A higher current ratio indicates a better ability to meet short-term financial
obligations, suggesting that Allbirds had a stronger short-term financial position
throughout these years. This could be attributed to different business strategies, industry
dynamics, or financial management practices between the two companies.
46
5.3.2. Quick ratio

Figure 5.7. Quick Ratio of Allbirds
In 2019, Allbirds had a quick ratio of 1.75. In 2020, Allbirds saw a significant increase in
its quick ratio to 2.85, indicating an improvement in its short-term liquidity. In 2021, the
quick ratio further surged to 4.16, reflecting a significant increase in short-term liquidity.
Although there was a reduction in 2022, the quick ratio remained strong at 3.84.
The trend in Allbirds' quick ratio from 2019 to 2022 is highly positive. The quick ratio
increased over this period, indicating an improved ability to meet immediate financial
obligations while minimizing reliance on inventory. This suggests effective liquidity
management, robust financial health, and efficient working capital utilization.
47
Figure 5.8. Quick Ratio of Allbirds vs Nike
From 2019 to 2021, Nike's quick ratio increased from 1.39 to 2.01, which was a positive
sign, but it still lagged behind Allbirds. Nike's quick ratio for 2022 was 1.84, which
showed a slight decrease compared to the previous year.
Allbirds consistently had higher quick ratios compared to Nike over the four-year period.
This indicates that Allbirds maintained a stronger position in terms of short-term liquidity
and its ability to cover immediate financial obligations with highly liquid assets.
48
5.3.3. Cash ratio

Figure 5.9. Cash Ratio of Allbirds
In 2019, Allbirds had a cash ratio of 1.44, this number increased to 2.32 in 2020. In 2021,
the cash ratio continued to rise to 3.56, indicating a significant increase in the company's
ability to cover short-term liabilities using readily available cash. In 2022, the cash ratio
remained strong at 3.34. The cash ratio consistently increased over this period, indicating
an improved ability to meet immediate financial obligations using readily available cash
and cash equivalents. This suggests robust liquidity management, strong financial health,
and effective financial management practices.
49
Figure 5.10. Cash Ratio of Allbirds and Nike
Allbirds consistently maintained a significantly higher cash ratio compared to Nike over
the four-year period. A higher cash ratio indicates a better ability to meet immediate
financial obligations with readily available cash and cash equivalents. This analysis
suggests that Allbirds had a stronger position in terms of short-term liquidity throughout
these years. This difference in cash ratios could be due to variations in business
strategies, industry dynamics, or financial management practices between the two
companies.
50
5.4. Profitability ratio

Figure 5.11. Profitability Ratio of Allbirds
The profit margin is a measure of a company's profitability, indicating how much profit
is earned for each dollar of revenue. A negative profit margin, as seen in all four years,
suggests that Allbirds incurred losses during this period. The increasing negative trend
indicates that the losses widened each year, which could be a concern for investors and
stakeholders. It may be necessary for the company to address the factors leading to these
losses and develop strategies to return to profitability.
Return on Equity (ROE) measures how efficiently a company generates profits from its
shareholders' equity. A positive ROE is generally desirable, as it indicates that the
company is generating a return on the equity invested. In the case of Allbirds, the positive
ROE in 2019 and 2020 suggests that the company was generating profits relative to its
equity. However, the negative ROE in 2021 and 2022 indicates that the company's net
51
income was insufficient to cover the shareholder's equity, signaling potential financial
challenges. These negative ROE values imply that the company was not providing an
adequate return to its shareholders during these years.
Return on Assets (ROA) measures how effectively a company utilizes its assets to
generate profits. Negative ROA values in all four years indicate that Allbirds had
difficulties in generating profits relative to its total assets. The declining trend in ROA
from -0.09 in 2019 to -0.22 in 2022 suggests worsening asset utilization and potential
inefficiencies in the company's operations.
In summary, the financial performance of Allbirds over the four-year period from 2019 to
2022 was challenging, as indicated by negative profit margins, declining ROE, and
consistently negative ROA. These ratios suggest the company faced losses, struggled to
provide a return to its shareholders, and had issues with asset utilization efficiency.
52
5.5. Cash Conversion Cycle

Figure 5.12. Cash Conversion Cycle of Allbirds

In 2019, Allbirds had a cash conversion cycle of 60.62 days, in 2020, the cash conversion
cycle significantly increased to 140.82 days. The trend keep increasing until 2022 when
the cash conversion cycle remained relatively high at 238.25 days. The trend in Allbirds'
cash conversion cycle from 2019 to 2022 is concerning. The cycle consistently increased,
suggesting challenges in efficiently converting investments into cash flows from sales.
The prolonged cash conversion cycle can have implications for liquidity, profitability,
and overall financial performance.
53
Figure 5.13. Cash Conversion Cycle of Allbirds, Nike and Apparel,

Source: YahooFinance & CSIMarket
Allbirds has a higher CCC than the entire industry, showing that the company is pursuing
a Conservative working capital management strategy, retaining working capital to
prepare for future business reorganization. This also coincides with reality. With the
business's declining business situation, Allbirds is looking to conduct research on
customer needs to improve their products, so retaining working capital is a necessary
activity for the company at this time.
54
5.6. Leverage
Figure 5.14. Debt to Equity Ratio of Allbirds
In 2019, Allbirds had a D/E ratio of -17.95. A negative D/E ratio is unusual and
suggests that the company had a negative equity balance during this year, which
could be due to accumulated losses or other financial circumstances. The D/E ratio
remained negative but improved to -10.57 in 2020 but turned positive in 2021,
indicating a more conventional financial structure. The D/E ratio continued to be
positive in 2022, with a ratio of 0.46.
The D/E ratio of Allbirds has shown a significant shift over the four-year period.
The company transitioned from having negative equity in 2019 to a more
conventional financial structure with a positive D/E ratio in 2021 and 2022. A
positive D/E ratio typically indicates that a company relies on a combination of
debt and equity for financing, with a higher ratio suggesting a greater reliance on
debt.
55
5.7. Correlation with stock price

5.7.1. Stock price
Figure 5.15. Stock price of Allbirds
Source: YahooFinance
In 2019 and 2020, the stock price remained at $0, in these two years, although it had
begun to create a popular brand image, Allbirds was still not officially listed on the stock
exchange. In 2021, the stock price surged to $15.95. The increase is the result of
successful Branding campaigns with sustainable values that have been recognized by the
intellectual class in the US. However, in 2022, the stock price dropped significantly to
$2.42. A dramatic decline like this appeared due to failures in predicting user needs,
when Allbirds' products gradually lost appeal, it was quickly outclassed by big brands
like Nike of Adidas.
56
5.7.2. Correlation between Allbirds’ Working Capital and Stock Price

Figure 5.16. Correlation between Allbirds’ Working Capital and Stock Price
Correlation: 0,80
A correlation coefficient of 0.80 between Allbirds' working capital and stock price
suggests a strong positive correlation. In other words, there is a high degree of
linear association between changes in Allbirds' working capital and changes in its
stock price. When working capital increases, the stock price tends to increase, and
when working capital decreases, the stock price tends to decrease. This positive
correlation could imply that investors or market participants perceive strong
working capital as a positive indicator for the company's financial health and
potential for growth, which, in turn, could drive up the stock price.
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PART 6: FORECAST LONG-TERM FINANCIAL STATEMENT & SHORT-

TERM CASH BUDGET
6.1. Long-term financial statement
Forecasting and budgeting are important components of effective working capital

management because they enable management teams plan for future business operations
and make educated decisions. This task involves creating a financial prediction for the
years 2023-2025, as well as cash budgeting for the four quarters of 2023.
The sales-based prediction approach is utilized, with the assumption that Allbirds' cash
flow is generated by sales. A pro forma income statement is created, and anticipated
assets and financings are formed based on sales-based cash flow, all while preserving
asset-liability and shareholder equity balance. Forecasting is done using time-series
analysis, which assumes a linear relationship between revenue patterns. Pro forma cash
flow predictions based on sales are also necessary. Allbirds' market share is expected to
remain constant in the future, according to the TREND formula on Excel. This method
facilitates financial planning and increases returns for owners.
As a result, we have:
Figure 6.1. Forecasted Revenue of Allbirds
Next year’s revenue = This year’s revenue x (1 + 0.154)

58
6.1.1. Long-term Income statements
Based on the growth rate of the revenue, we calculate the projected income statement and
balance sheet by sale-based methods.
Table 6.1. Income statement of Allbirds 2022-2025
INCOME STATEMENTS
2022 2023 2024 2025
Net Revenue 297,766.00 343,622.00 396,534.00 457,607.00
Cost of Revenue 168,138.00 194,031.00 223,912.00 258,304.00
Gross Profit 129,628.00 149,591.00 172,628.00 199,212.00
Operating Expense
Selling, General and 166,736.00 192,413.00 22,045.00 256,239.00

Administrative Expense
Marketing Expense 59,109.00 68,212.00 78,716.00 90,839.00
Impairment Expense 3,286.00 3,792.00 4,376.00 5,049.00
Restructuring Expense 728.00 840,112.00 969,489.00 1118,791.00
Total Operating Expense 229,913.00 265,32.00 306,179.00 353,33.00
Loss from Operation (100,285.00) (115,729.00) (133,551.00) (154,118.00)
Interest Income (Expense) 19.00 21,926.00 25,302.00 29,199.00
Other Income (Expense) 139.00 160,406.00 185,108.00 213,615.00
(Loss) Income before Tax (100,127.00) (115,546.00) (133,341.00) (153,875.00)
Income Tax (provision) Benefit (1,227.00) (1,416.00) (1,634.00) (1,885.00)
Net Income (101,354.00) (116,962.00) (134,975.00) (155,761.00)

59
6.1.2. Long-term Balance Sheet
For the long-term balance sheet, most components are predicted sales. However, the
trend of the long-term debt almost remained constant in data. So, we assume that all the
long-term debt is repaid at maturity.
Table 6.2. Balance sheet of Allbirds 2022-2025
BALANCE SHEET
2022 2023 2024 2025
ASSETS
Current Assets
Cash and Cash Equivalent 167,136.00 192,874.00 222,578.00 256,855.00
Account Receivables, Net 9,206.00 10,624.00 12,26.00 14,148.00
Inventory 116,796.00 134,783.00 155,539.00 179,492.00
Prepaid Expenses 15,26.00 17,61.00 20,322.00 23,352.00
Other Current Assets 536.00 619.00 714.00 824.00
Total Current Assets 308,934.00 356,51.00 411,412.00 474,77.00
Property and Equipments, Net 54,340.00 62,708.00 72,365.00 83,51.00
Operating Lease Right-of-use 91,232.00 105,282.00 121,495.00 140,205.00

Assets
Other Assets 7,858.00 9,068.00 10,465.00 12,076.00
Total Long-term Assets 153,43.00 177,058.00 204,325.00 235,792.00
Total Assets 462,364.00 533,568.00 615,738.00 710,561.00
LIABILITIES AND STOCKHOLDER’S EQUITY
Current Liabilities
Accounts Payable 12,245.00 14,131.00 16,307.00 18,818.00

60
Accrued Expenses and Other 23,447.00 27,058.00 31,225.00 36,033.00

Current Liabilities
Current Lease Liabilities 10,263.00 11,844.00 13,667.00 15,772.00
Deferred Revenue 4,057.00 4,682.00 5,403.00 6,235.00
Total Current Liabilities 50,012.00 57,713.00 66,602.00 76,858.00
Noncurrent Lease Liabilities 95,583.00 110,303.00 127,289.00 146,892.00
Shareholder’s Equity 316,769.00 365,551.00 421,846.00 486,811.00
Total Liabilities and 462,364.00 533,568.00 615,738.00 710,561.00

Stockholder’s Equity
6.2. Short-term financial planning
For working capital, Allbirds, a sportswear firm, focuses on account receivables,

inventory, and account payable. Because the corporation works both upstream and
downstream, these finances must be thoroughly examined. The company's sales are
forecasted based on the proportion of revenue contributed by each quarter to total
revenues in 2022. The entire project sales for 2023 are allocated in this manner. Except
for depreciation, depletion, and amortization expenditure, interest and debt expense, and
net periodic benefit costs, which are divided evenly throughout all quarters, quarterly
expenses are distributed proportionally to the percentage of sales each quarter to the year.
Table 6.3. Percentage of Revenue in 4 quarters of Allbirds
2023 Q1 Q2 Q3 Q4
% of Revenue 21,08% 26,25% 24,4% 28,27%
61
Table 6.4. Projected Quarter Income Statement in 2023 of Allbirds
INCOME STATEMENT
Q1 Q2 Q3 Q4
Net Revenue 62,769.00 78,164.00 72,655.00 84,178.00
Cost of Revenue 35,443.00 44,136.00 41,026.00 47,533.00
Gross Profit 27,326.00 34,027.00 31,629.00 36,646.00
Operating Expense
Selling, General and 35,148.00 43,768.00 40,683.00 47,137.00

Administrative Expense
Marketing Expense 12,460.00 15,516.00 14,423.00 16,710.00
Impairment Expense 692.689 862.575 801.784 928.952
Restructuring Expense 153.462 191.1 177.632.00 205.806
Total Operating Expense 48,466.00 60,352.00 56,099.00 64,996.00
Loss from Operation (21,107.00) (26,325.00) (24,369.00 (28,350.00

) )
Interest Income (Expense) 4.0052 4.988 4.636 5.371
Other Income (Expense) 29.301 36.488 33.916 39.295
(Loss) Income before Tax (21,365.00) (26,283.00) (24,431.00 (28,306.00

) )
Income Tax (provision) Benefit (258.652) (322.00) (299.388) (346.873)
Net Income (21,365.00) (26,605.00) (24,730.00 (28,653.00

) )
62
The average collection period is 11,28 days/quarter. Assuming each quarter had 30 days,
receivable turnover ratio in the period was calculated at 7,98 times. We used this to
compute ending balance and calculate collection as follow:
Table 6.5. Projected cash receipts of Allbirds
Projected Cash Receipts Q1 Q2 Q3 Q4
Beginning Receivable 9,206 7,865 9,794 9,104
Sales 62,769.00 78,164.00 72,655.00 84,178.00
Cash Collection 64,110.00 76,235.00 73,345.00 82,734.00
Ending Receivables 7,865.00 9,794.00 9,104.00 10,548.00
Inventory conversion period is 253,54 days/quarter. Assuming each quarter had 30 days,
inventory turnover ratio in the period was calculated at 0,35 times. We used this to
compute the ending balance and calculate purchase as follows:
Table 6.6. Inventory of Allbirds
Inventory Q1 Q2 Q3 Q4
Beginning Inventory 116,796.00 99,846.00 124,336.00 115,574.00
Purchase 18,493.00 68,626.00 32,264.00 65,864.00
Cost of sales 35,443.00 44,136.00 41,026.00 47,533.00
Ending Inventory 99,846.00 124,336.00 115,574.00 133,905.00
Days payable outstanding in 2022 were 26,58 days. Assuming each quarter had 30 days,
payable turnover ratio in the period was calculated at 3,39 times. We used this to
compute the ending balance and calculate payment as follow:
63
Table 6.7. Account Payable of Allbirds
Payables Q1 Q2 Q3 Q4
Beginning Account Payable 12,245.00 25,277.00 73,638.00 102,324.00
Credit Purchase 18,493.00 68,626.00 32,264.00 65,864.00
Payment 5,461.00 20,265.00 9,578.00 19,449.00
Ending Account 25,277.00 73,638.00 102,324.00 148,739.00
The cash disbursement and cash budget variables were collected from previous
calculations, and the results of calculation are presented as follows:
Table 6.8. Projected Cash Disbursement of Allbirds
Projected Cash Q1 Q2 Q3 Q4
Disbursement
Payment Account 5,461.00 20,265.00 9,578.00 19,449.00
Operational Expense 40,561.00 50,509.00 46,949.00 54,395.00
Tax 298.00 372.00 345.00 400.00
Capital Expenditure 14,350.00
Interest and Dividend 4.0052 4.988 4.636 5.371

Payment
Total cash disbursement 60,674.00 71,151.00 56,877.00 74,249.00

64
Table 6.9. Cash budget of Allbirds
Cash Budget Q1 Q2 Q3 Q4
Beginning cash balance 167,767.00 171,203.00 176,287.00 192,755.00
Total cash collection 64,110.00 76,235.00 73,345.00 82,734.00
Total cash disbursement 60.674.00 71.151.00 56.877.00 74.249.00
Net cash flow 3,436.00 5,084.00 16,468.00 8,485.00
Ending cash balance 171,203.00 176,287.00 192,755.00 206,240.00
Changes in cash balance 3,436.00 5,084.00 16,468.00 8,485.00

65
References
(n.d.). Allbirds: Sustainable Shoes & Clothing | The Most Comfortable Shoes in The World.
https://www.allbirds.com/
Allbirds, Inc. (BIRD) Stock Price, News, Quote & History. (n.d.). Yahoo Finance.
https://finance.yahoo.com/quote/BIRD?p=BIRD
Allbirds, Inc. REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933.
(n.d.). sec.gov. https://www.sec.gov/Archives/edgar/data/1653909/000162828021017824/
allbirdss-1.htm
Apparel, Footwear & Accessories Industry Efficiency, Revenue per Employee, Inventory and
Receivable Turnover Ratios Q2 2023. (n.d.). CSIMarket.
https://csimarket.com/Industry/industry_Efficiency.php?ind=401
NIKE, Inc. (NKE) Balance Sheet. (n.d.). Yahoo Finance.
https://finance.yahoo.com/quote/NKE/balance-sheet?p=NKE
Petro, G. (2019, March 9). Footwear Sensation Allbirds’ Second Chance. Forbes.
https://www.forbes.com/sites/gregpetro/2023/07/26/footwear-sensation-allbirds-second-
chance/?
sh=3901fdfe79d0&fbclid=IwAR0i6__x9G35FV2BdJ4Q41fkWEOQbZpjljw3SgAXrfXz6I4n
pCBX32f0Agc
Tobin, B. (2023, August 11). What Happened to Allbirds? Business Insider.
https://www.businessinsider.com/what-happened-to-allbirds-rise-fall-2023-4#in-may-
66
allbirds-announced-a-leadership-shakeup-as-co-founder-tim-brown-said-in-an-analyst-call-
he-would-no-longer-be-co-ceo-of-the-company-24

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NATIONAL ECONOMICS UNIVERSITY

SCHOOL OF ADVANCED EDUCATION PROGRAMS

CASE STUDY: ALLBIRDS

Instructor: PhD. Tran Phi Long

5.7.1. Stock price

Table Name of table Page

2.1.2 Allbirds’s Balance sheet in 2020-2021 14

2.1.3 Allbirds’s Balance sheet in 2021-2022 17

2.1.4 Leverage ratio of Allbirds 2019-2022 21

2.2.1 Operating Cash Flow in 2019 - 2022 22

2.2.2 Investing Cash Flow in 2019 - 2022 23

2.2.3 Financing Cash Flow in 2019 - 2022 24

3.2 Allbirds’ Product Catalog Inventory 26

3.3 Allbirds’ Inventory Ratios 28

3.4 Nike and Industry Inventory Ratios 30

4.1 Account Receivable Ratios of Allbirds 34

4.2 Account Receivable Turnover of Allbirds, Nike and Apparel, 35

4.3 Account Payable Ratios of Allbirds 36

4.4 Number of factories of Allbirds 38

4.5 Account Payable Turnover of Allbirds, Nike and Apparel, 38

6.1 Income statement of Allbirds 2022-2025 57

6.2 Balance sheet of Allbirds 2022-2025 58

6.3 Percentage of Revenue in 4 quarters of Allbirds 59

6.4 Projected Quarter Income Statement in 2023 of Allbirds 60

6.5 Projected cash receipts of Allbirds 61

6.6 Inventory of Allbirds 61

6.7 Account Payable of Allbirds 62

6.8 Projected Cash Disbursement of Allbirds 62

6.9 Cash budget of Allbirds 62

Figure Name of figure Page

4.1 Account Receivable Turnover of Allbirds, Nike and Apparel, 36

4.2 Account Payable Turnover of Allbirds, Nike and Apparel, 39

5.1 Working Capital of Allbirds 41

5.2 Working Capital of Allbirds vs Nike 42

5.3 Working Capital Turnover of Allbirds 43

5.4 Working Capital Turnover of Allbirds vs Nike 44

5.5 Current Ratio of Allbirds 45

5.6 Current Ratio of Allbirds vs Nik3 46

5.7 Quick Ratio of Allbirds 47

5.8 Quick Ratio of Allbirds vs Nike 48

5.9 Cash Ratio of Allbird 49

5.10 Cash Ratio of Allbirds 50

5.11 Profitability Ratio of Allbirds 51

5.12 Cash Conversion Cycle of Allbirds 52

5.13 Cash Conversion Cycle of Allbirds, Nike and Apparel, 53

Footwear & Accessories

5.14 Debt to Equity Ratio of Allbirds 54

5.15 Stock price of Allbirds 55

5.16 Correlation between Allbirds’ Working Capital and Stock 56

6.1 Forecasted Revenue of Allbirds 57

PART 1: COMPANY BACKGROUND

1.3. General Environment

Environmental, Social, and Governance (ESG) factors gained prominence in the

Allbirds operates in a dynamic economic environment, and its business is influenced by a

The sociocultural landscape saw a notable increase in awareness and discussions

Sociocultural conversations around diversity, inclusion, and equity gained momentum.

By focusing on sustainability, ethics, and comfort while leveraging digital engagement,

Allbirds strategically incorporates technology into various aspects of its business

PART 2: CASH MANAGEMENT ANALYSIS

2.1. Balance sheet analysis

Cash and equivalents 126,551 74,312 52,239 43.11

Receivables 23,698 11,116 12,582 10.3

Inventories 59,222 44,327 14,865 12.27