Question

Comprehensive Project:

The course project consists of a comparative financial statement analysis using all of the tools, methodologies and concepts mastered during the FSA course using two publicly traded companies (large cap and/or midcap stocks) competing in the same industry. Examples are Home Depot and Lowes, ExxonMobil and Chevron. (your choice).

The project is both historical and forward looking and should at a minimum address the following questions:

1) who has been and who is the superior competitor? Why?

2) Are the companies presently valued properly and why or why not?

3) What are the growth prospects for the companies and which company is a better investment to add to an investment portfolio and why?

4) Which company has superior qualitative and quantitative accounting metrics? Why?

5) What non-accounting factors influence your prediction and decision? Why?

6) Which company exhibits superior corporate governance metrics and corporate social responsibility and how did this influence your decision?

7) What recent activities did the companies undertake, e.g. M&A activity that influenced your decision?

Answer 1

1) Nike and Adidas both are the modern brand of sporting goods and dominating the industry around the world. Nike is US based company while Adidas is German based but both of these are world’s leading brand in sporting goods however, Nike is a superior competitor for Adidas even the Nike entered in market after Adidas but has grabbed around 170 countries around the world in sporting goods industry while Adidas is serving only around 160 countries. Therefore, Nike is most popular brand around the world even in Top 100 Global Brand Report Nike is on top of the list than Adidas.

2) Nike is most popular and famous brand across the world in sporting goods and most valuable in the market and at present the market capitalization of Nike is also crossed $100bn which is the pure brand value of Nike in sporting goods. Nike is also controlling more than 50% of US Athletic Footwear Market. However, the market capitalization of Adidas is only around 50bn Euro and has only 15-20% of US Market.

3) Following are the growth prospects for investment and to add for investment portfolio:

Brand Awareness & Advertisement: This is the main key factor that may affect the success or failure of any company in the market. In present environment, no one have time to think and analyse the new product or services of any company therefore it is needed to aware the people/consumers with the quality of new product and services.

Implementation of Latest Technology: This is also a main requirement to implement the latest technology for providing best product and services to the consumers as per their needs. Now a day technology is also reached at advance level where everything is computer aided. Therefore, it is also required for Nike that product and services of Nike must be computer aided for best products for consumers.

Coordination between Demand & Supply: There must be proper coordination between the demand and supply of product and services of any organisation. If any organisation is operating globally then it is needed that organisation is able to supply the product and services on timely basis across the country.

Therefore, investment in Nike is the best option between these two Sporting Brand of US and UK to investment and to add in portfolio investment.