Reference no: EM132638423

Question - Describe and illustrate the use of vertical analysis in evaluating a company's performance and financial condition. The following data are taken from recent financial statements of Nike, Inc. (NKE) (in millions):

Year 2 Year 1

Revenues (sales) $32,376 $30,601

Operating income 4,502 4,175

1. Determine the amount of change (in millions) and percent of change in operating income from Year 1 to Year 2. Round to one decimal place. (Horizontal Analysis) (Change/Year 1-base year)

2. Determine the percentage relationship between operating income and sales for Year 2 and Year 1. Round to one decimal place. (Vertical Analysis) (Operating Income/Revenues)

Discussion:

1. What conclusion can you draw from this analyses above?

2. Do you think that Nike's 2018 "Just Do It" ad campaign was to boost sales or to take a political stance on a sensitive issue or both? Try to keep your comment on the accounting side versus any personal view you may possess, as I do not want anyone to be offended (please/thanks). Always keep it positive!

3. Finally, right or wrong aside, there was a financial impact to that ad campaign. Did it strengthen sales or decline sales? I only want you to discuss any financial impact that you can find. Were the results good or bad?