FINANCIAL ACCOUNTING FINAL PROJECT

(RATIO ANALYSIS)

PRESENTED BY:
EAIMAN BASIT
404405
BBA-1ST SEMESTER

PRESENTED TO:
MAM HINA
BRANDS
 INTRODUCTION
In 1949, as a result of the breakdown in the relationship between
brothers 2 companies were created. Adolf created Adidas, and
Rudolf established Puma, which became Adidas' business rival.
Adidas is a multinational corporation, founded and
headquartered in Herzogenaurach, Germany, that designs and
manufactures shoes, clothing and accessories. It is the
largest sportswear manufacturer in Europe, and the second
largest in the world. Adidas' logo is three stripes, which is used on
the company's clothing and shoe designs as a marketing aid.
Mission Statement
“To be the best sports company
in the world by staying authentic
to all athletes, tailoring to their
unique needs, tastes and
experiences.”

Vision Statement
“Through sports we have the power to
change lives. To enhance social and
environmental performance in the supply
chain, thereby improving the lives of the
people using our product.”
 INTRODUCTION

Nike, Inc. was founded on January 25, 1964, as Blue

Ribbon Sports, by Bill Bowerman and Phil Knight, and
officially became Nike, Inc. on May 30, 1971. It is an
American multinational corporation that is engaged in
the design, development, manufacturing, and
worldwide marketing and sales of footwear, apparel,
equipment, accessories, and services. The company
is headquartered near Beaverton, Oregon, in
the Portland metropolitan area. It is the world's largest
supplier of athletic shoes and apparel and a major
manufacturer of sports equipment.
Mission Statement
“To bring inspiration and innovation
to every athlete in the world.”
1. Innovation.
2. Inspiration.
3. Every athlete in the world.

Vision Statement
“To remain the most authentic,
connected, and distinctive brand.”
1. Authentic
2. Connected
3. Distinctive
 Ratio Analysis

1. Balance Sheet
• Current Ratio
• Quick Ratio
• Absolute Liquid Ratio
• Working Capital

2. Profit & Loss Account

• Gross Profit Ratio
• Operating Cost Ratio
• Operating Profit Ratio
• Net profit
 Current Ratio
The current ratio is a liquidity ratio that measures a
company’s ability to pay short-term and long-term
obligations. The current ratio is called “current”
because, unlike some other liquidity ratios, it
incorporates all assets and liabilities. The current ratio
is also known as “Working Capital Ratio”.

Formula:
Current ratio = Current Assets/Current Liabilities
Year 2016 2017
Adidas 1.31 1.37
Nike 2.8 2.93

Chart Title
3.5
3 2.93
2.5
2
1.5 1.37
1
0.5
0
2016 2017
 Quick Ratio
The quick ratio is a measure of how well a company can
meet its short-term financial liabilities. Also known as
the ”Acid-test ratio”.

Formula:
Current Assets – ( Inventories + Prepaid expenses) / Current Liabilities
Year 2016 2017
Adidas 0.75 0.78
Nike 1.62 1.8

Chart Title
Nike

1.8
1.62

0.75 0.78

2016 2017
 Absolute Liquid Ratio
Absolute liquidity ratio is one of liquidity indicators which
informs us about how many times the firm would be able
to pay its current liabilities, if it converts its financial assets
to cash.

Formula:
Cash in hand + Cash in Bank + Marketable Security / Current Liabilities
Year 2016 2017
Adidas 0.44 0.5
Nike 1.17 1.39

2
1.8
1.6
1.4
1.2
1 Nike
0.8 Adidas
0.6
0.4
0.2
0
2016 2017
 Working Capital
The capital of a business which is used in its day-to-day trading
operations.

Formula:
Current Assets – Current Liabilities
Year 2016 2017
Adidas 2121 2354
Nike 9667 10587

Chart Title
12000
10000
8000
Axis Title 6000
4000
2000
0
Year Adidas Nike
 Gross Profit Ratio
Gross profit ratio is a profitability ratio that shows the
relationship between gross profit and total net sales revenue. It is
a popular tool to evaluate the operational performance of the
business.

Formula:
Gross Profit / Net Sale *100
Year 2017 2016
Adidas 50.44% 49.23%
Nike 44.57% 46.24%

2500
2017 2016
2000

1500

1000

500
50.44 49.23 44.57 46.24
0
year adidas nike
 Operating Cost Ratio
In finance, the Operating ratio is a company's operating
expenses as a percentage of revenue. This financial ratio is
most commonly used for industries which require a large
percentage of revenues to maintain operations

Formula:
Operating Cost/Net Sale * 100
2500
2017 2016
2000

1500

1000

500
41.86 42.66 21.02 22.21
0
year adidas nike
 Net Profit
Net profit ratio expresses the relationship between net profit after
taxes and sales. This ratio is a measure of the overall profitability net
profit is arrived at after taking into account both the operating and
non-operating items of incomes and expenses. The ratio indicates
what portion of the net sales is left for the owners after all expenses
have been met.

Formula:
Net Profit/ Net Sale * 100
2500
2017 2016
2000

1500

1000

500
5.18 5.51 12.34 11.61
0
year adidas nike