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Essay / Research Paper Abstract
A 5 page paper discussing the financial environment and internal controls at both of these companies. Both Nike and Reebok have been and remain well-managed from a financial perspective. Reebok's major failing likely was marketing; in the past Nike's was its rabid pursuit of profitability at all costs. Each company paid prices for those errors, but their financial reporting has been more than only adequate. Bibliography lists 5 sources.
Page Count:
5 pages (~225 words per page)
File: CC6_KSacctNikRee2.rtf
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Both Nike and Reebok have been and remain well-managed from a financial perspective. Reeboks major failing likely was marketing; Nikes was its rabid pursuit of profitability at
all costs. Each company paid prices for those errors, but their financial reporting has been more than only adequate. a. Describe and quantify the elements of working capital for the
most recent fiscal year Working capital is an equation of current assets minus current liabilities. The measure of working capital provides some
measure of security for the investor, in that the investor can see that if the figure is positive, then the company has an effective "security blanket" it can use to
meet its obligations. Table 1. Working Capital of Nike and Reebok (in thousands) Nike Reebok Current Assets 6,351,100 1,857,513 Current Liabilities 1,999,200 806,314 Working Capital 4,351,900 1,051,199
Sources: (Balance Sheet, 2006; Reebok International Annual Report 2004, 2005) Certainly both companies have strongly positive values for working capital; the magnitude of the
difference between them reflect the differences in sizes of the two companies. In its last annual report as an autonomous company, however, Reebok noted that it had some working
capital issues facing it in the future. Management told investors: We must commit to production tooling, and in some cases to production, in advance of orders because of the
relatively long lead times for design and production in the footwear industry. We must also maintain inventory to fulfill "at-once" shipments. We believe our practices with respect to working capital
items are consistent with practices in the footwear and apparel industry in general (Reebok International Annual Report 2004, 2005; p. 27). Reebok was
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