standing of sports and the athlete. Tireless in his pursuit of innovation. That man is Bill Bowerman. And while no reference can give justice to his contribution or adequately express his spirit, we will always try to be that which would make him proud. Philip H. Knight Chairman of the board And CEO Nike Financial Ratios 1999 (In Millions) Current Ratio = current assets/current liabilities = 5,247.7 divided by 1,4469.9 = 3.626 In most industries, according to the textbook, 2.0 is considered a good ratio. Acid Test Ratio = cash + short term investments + current receivable/ total current Liabilities = 198.1 + 1,540.1 + 65.4 + 73.2 = 1.297 Nike?s ability to pay all of their current liabilities, if they all came due immediately, is strong. According to most financial publications, an acid test of .90 to 1.00 is acceptable in most industries. Debt Ratio = total liabilities/ total assets = 1913.1 divided by 5247.7 = .364 Most company?s debt ratios range around .57 - .67. Nike?s .36 debt ratio indicates a low risk debt position. Times-Interest-Earned Ratio = income from operations/ interest expense = 790.2 divided by 44.1 = 17.9 The norm of U.S. businesses in this ratio falls in the range of 2.0 to 3.0 for most companies. This ratio of 17.9 means that Nike as a company can cover their interest expense almost eighteen times with their operating income. This figure in a word ?Outstanding. Rate of Return on Sales = net income/ net sales = 451.4 divided by 8,776.9 = .0514 This ratio shows that Nike earns five cents for every dollar in sales. Rate of Return on Assets = net income + interest expense/ average total assets = 451.4 + 44.1 divided by 5,247.7 = .094 (1997 total assets not listed) This ratio measures how profitably a company uses its assets. This is simply another tool to measure a company?s profitability. The rate of return on assets varies largely from industry to industry. Rate of Return on Common Stockholders Equity = net income pref...
