Working Capital Strategis
The following content provided will include information regarding Nikes Inc. cash management strategies, which will include more in depth information from the previous group paper. In addition, working capital recommendations will be provided to senior management base on next year’s in the pro-forma financial statements.
Working Capital Strategies Paper Financial statements are a vital factor of any business organization; they show where a company’s money came from, where it went, and where it is now, according to Securities and Exchange Commission website (2008). In addition, four main financial statements consist of the balance sheet, income statement, cash flow statement, and statement …show more content…
YEAR 2008 2007
Totals (in millions) 447.4 440.4
Less current Maturities 6.3 30.5
Final Outcome 441.1 409.9
To accumulatively generate a 20% increase with other financial investments, more bonds should be issued. NIKE’s equity is strong at 25.4 percent in relation to return on assets. (See Figure 2)
Figure 2 Return on Equity versus Return on Assets “The fair value of the company’s long-term debt, including current portion, is approximately 450.0 million at May 31, 2008 and 443.2 million at May 31, 2007” (NIKE, Inc., 2008, p.20). The relationship between equity and debt conveys NIKE’s capacity to increase bond investments, since that allows for ample leverage. The working capital from 2004 to 2008 clearly solidifies leverage for NIKE to be more aggressive in the issuance of bonds. Corporate bonds can “provide steady income for investors” in addition to preserving NIKE’s principle (Harper, D., 2008).
Figure 3 Working Capital
Working Capital Recommendations and Impact of Revenue Increase Working capital recommendations refers to an increase of financial investments through the issuance of stocks and bonds. This will increase monies to use for restructuring and isolating new potential footwear for the market place. Increase quantity with a low-performance footwear versus high-end athletic foot wear will generate revenue appealing to a new market in the United States and Europe. This will increase sales, volume, and inventory that can