Internet Search Company
Comparisons
By:
Mike Walsh
Katie Mannix
Grant Paulsen
Peter Borstelmann
Industry Description

The industry we chose to follow for our
internet search project and final project was
the sporting goods industry. We decided to
focus upon the footwear and apparel aspect
of the industry, choosing Nike, Converse,
Reebok and Fila.
Stock Charts
Reebok International Ltd.
Nike Inc.
Fila Holding S.p.A.
Converse Inc.
Descriptions of Financial Ratios
Return on Equity: Evaluates only at the return earned by management on the
stockholders investment. 12% ok…look for 30%
Return on Assets: Evaluate whether management has earned a reasonable return with
the assets under its control. Higher than 15% is a good average.
Return on Investment: Evaluates the efficiency with which financial resources are
employed.
Current Ratio: Measures the short-term debt-paying ability of the company. The
higher the current ratio, the more solvent the company is. Satisfactory Current Ratio is
2 to 1.
Quick Ratio: Compares only the most liquid current assets to measure short-term
solvency. Satisfactory Quick Ratio is 1 to 1.
Description of Financial Ratios
LT Debt/Equity: Measure of the companies long-term credit risk. The lower the debt
ratio, the safer their position. This ratio is the Total Long Term Debt for the most recent
fiscal quarter divided by Total Shareholder Equity for the same period.
Total Debt Equity: This ratio is Total Debt for the most recent fiscal quarter by Total
Shareholder Equity for the same period.
Gross Margin: Measure of the profitability of the company’s products. This value
measures the percent of revenue left after paying all direct production expenses. It is
calculated as the trailing 12 months Total Revenue minus the trailing 12 months Cost of
Goods Sold divided by the trailing 12 months Total Revenue and multiplied by 100.
Operating Margin: This value measures the percent of revenues remaining after paying
all operating expenses. It is calculated as the trailing 12 months Operating Income
divided by the trailing 12 months Total Revenue, multiplied by 100.
Description of Financial Ratios
Price/Earnings: This ratio is calculated by dividing the current Price by the sum of the
Diluted Earnings Per Share from continuing operations BEFORE Extraordinary Items
and Accounting Changes over the last four quarters.
Price/Sales: This is the current Price divided by the Sales Per Share for the trailing
twelve months. If there is a preliminary earnings announcement for a quarter that has
recently ended, the revenue (sales) values from this announcement will be used in
calculating the trailing twelve-month revenue per share.
Price/Book: This is the Current Price divided by the latest quarterly Book Value Per
Share.
Price/ Cash Flow: This is the current Price divided by the trailing twelve month Free
Cash Flow Per Share. Free Cash Flow is calculated from the Statement of Cash Flows
as Cash From Operations minus Capital Expenditures and Dividends Paid
Nike Inc.
Financial Analysis
Stock Symbol: NKE
NIKE INC.
• For the three months ended 8/31/00, Revenues for Nike
Inc. rose 5% to $2.64 Billion dollars.
• Net Income Increased 5% to $210.2 Million Dollars.
• Reasons for the rise in Revenue and Net Income have
been reported increased in International regional footwear,
apparel and equipment sales.
• Other factors for the increase were a decrease in income
taxes and improved margins.
• The Market Cap for Nike in Millions was:
10,938.93 (MIL)$
• As of 5/31/2000 Nike had 21,800 Employees.
Key Ratios and Statistics for Nike Inc.

Price and
Volume(Stocks)
Recent Price:
52 Week High:
52 Week Low:
Avg. Daily Vol (Mil)
• Management Effectiveness
$44
$56
$26
1.13
• Valuation Ratios
Price/Earnings:
20.46
Price/Sales:
1.32
Price/Book:
3.57
Price/Cash Flow:
15.03
Return on Equity:
18.17
Return on Assets:
10.13
Return on Investment:
15.49
Key Financial Ratios Cont.
Financial
• Profitability
Strength
Quick Ratio:
Current Ratio:
LT Debt/Equity:
Total Debt/Equity
.91
1.70
.14
.45
Gross Margin%:
40.44
Operating Margin%:
10.16
Profit Margin%:
6.45
Is Nike a Good Investment?
Yes, Nike seems like it is on the right path in the
footwear Industry. Nike Inc. has been increasing
in every category possible, that is why they are
ranked # 1 in the Athletic footwear industry. They
are capable of paying off their short term debt, and
are also quite reliable in the long term as well.
Stocks for Reebok are up as well, after falling to a
52 week low of $26, they are now at $44and
rising. Overall Nike seems like a solid company
and will compete if not control the top Athletic
Footwear Companies for some time.
Reebok International Ltd.
Financial Analysis
Stock Symbol: RBK
Reebok-Past Nine Months




For the 9 months ended 9/30/00, net sales
decreased 2% to $2.24B.
Net income totaled $74.7M, up from $25.7M.
Revenues reflect decreased U.S. apparel sales.
Net income reflects the absence of a $38M special
charge related to restructuring activities,
decreased S/G/A expenses as a percentage of
sales and decreased interest expense.
Key Ratios and Statistics

Price & Volume
Recent Price
52 Week High $22
52 Week Low

$21
Mgmt Effectiveness
Return on Equity:
11.53
Return on Assets:
4.24
Return on Investment: 7.05
$7
Avg Daily Vol (Mil) 0.50
• Valuation Ratios
Price/Earnings:
20.87
Price/Sales:
.44
Price/Book:
2.14
Price/Cash Flow:
10.74
Key Ratios Cont.

Financial Strength
• Profitability
Quick Ratio:
Gross Margin %:
1.20
Current Ratio:
2.08
LT Debt/Equity:
0.61
Total Debt/Equity: 0.80
38.22
Operating Margin %:
3.67
Profit Margin %:
2.34
Is Reebok a Good Investment?
Yes, Reebok seems like it is on the right path in the
footwear Industry. They are capable of paying off
their short term debt, and are also quite reliable in
the long term as well. Stocks for Reebok are up as
well, after falling to a 52 week low of $7, they are
now at $21 and rising. Overall Reebok seems like a
solid company and will compete with the top
Athletic Footwear Companies for some time.
Fila Holdings, S.P.A
Financial Analysis
Stock Symbol: FLH
FILA Holdings, S.P.A (FLH)




FLH is a designer and marketer of athletic and
casual footwear, and of activewear, casualwear
and sportswear, for men, women and children.
For the 9 months ended 9/30/00, revenues
increased 9%.
Net loss before U.S. GAAP decreased 43%.
Revenues reflect increased apparel and footwear
sales. Lower loss reflects decreased selling,
general and administrative expenses as a
percentage of revenues.
Financial Ratios

Price and Volume
Recent Price:
$9
52 Week High:
$12
52 Week Low:
$7
Average Daily Volume (mil):
0.02
• Valuation Ratios
Price/Earnings:
N/M
Price Sales:
0.27
Price/Book:
2.08
Price/Cash Flow:
N/M
• Management Effectiveness
Return on Equity:
-30.84
Return on Assets:
-6.31
Return on Investments:
-18.02
Financial Ratios Cont.
• Financial Strength
•Profitability
Quick Ratio:
.51
Gross Margin%:
39.63
Current Ratio:
1.13
Operating Margin%:
-0.19
LT Debt/Equity:
.54
Profit Margin%:
-4.46
Total Debt/Equity:
3.27
Is Fila a Good Investment?
No, better companies with less debt, less risk, and a
more promising futures can be found in this industry
or others.
Converse Inc.
Financial Analysis
Stock Symbol: CVEO
Examples of Poor Performance

Net sales for the third quarter of 1999 decreased
by 22.1% to $61.0 million from $78.3 million
– WHY?
» The decrease in net sales in the third quarter of 1999 was
primarily attributable to decreases in the athletic originals,
children’s and cross training categories.
» Selling, general and administrative expenses increased $0.7
million to $20.6 million in the third quarter of 1999
compared to $19.9 million in the prior year period.
» Converse’s global order backlog declined to $89.8 million
from $109.3 million.
Ratio Analysis

• Valuation Ratios
Price & Volume
Recent Price:
52 Week High:
52 Week Low:
Avg Daily Vol (Mil):
$.56
$2.00
$.26
.09
• Management Effectiveness
Return on Equity:
N/M
Return on Assets:
-26.92
Return on Investment:
N/M
Price/Earnings:
N/M
Price/Sales:
.05
Price/Book:
N/M
Price/Cash Flow:
N/M
Ratios Continued
• Financial Strength
•Profitability
Quick Ratio:
.19
Gross Margin:
Current Ratio:
.49
Operating Margin:
LT Debt/Equity:
N/M
Total Debt/Equity:
N/M
Profit Margin:
21.41
3.80
-20.74
Is Converse a Good Investment?
No, better companies with less debt, less risk,
and a more promising futures can be found in
this industry or others.
Industry Comparison
Ind. Avg.
Nike Reebok Fila Converse
Quick
Ratio
1.17
.91
1.27
.51
.19
Current
Ratio
2.21
1.70
2.12
1.13
.49
LT Debt
to Equity
.16
.14
.52
.54
N/A
Total
Debt to
Equity
.40
.45
.70
3.27
N/A
What one can tell from the Ratio
Chart:





Of the four companies, Reebok has the best short term
debt-paying ability/solvency rate. Nike is second, with
Fila and Converse a distant 3rd and 4th.
Nike has the best long term debit ability.
Nike is a solid investment, stocks are at a high $43.69 per
share, double that of Reebok at $20.38 with Fila and
Converse failing to reach $10 per share.
Nike has the best Gross Margin, at 40.44 % with Reebok
having a slight less total at 38.22%.
Overall Market Capital in the Millions, Nike completely
blows away the competitors with 11,496.14, Reebok with
1,305.19, Fila 231.84, and Converse with 9.81.
Additional Information
The information gathered for this presentation can be found at the
following Internet sites:
•NIKE INC: www.nikebiz.com
http://www.marketguide.com/mgi/SNAP.asp?nss=www&rt=snap&rn=6446N
•REEBOK INC: www.reebok.com
http://www.marketguide.com/mgi/SNAP.asp?nss=www&rt=snap&rn=7530N
•CONVERSE INC: www.converse.com
http://www.marketguide.com/mgi/SNAP.asp?nss=www&rt=snap&rn=A0A38
•FILA Holdings S.p.A.: www.fila.com
http://www.marketguide.com/mgi/SNAP.asp?nss=www&rt=snap&rn=A0560