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  • Finance case study,paper and excel worksheet,
  • 6page,
  • please read the description first, the use the guideline to complete the case 1, 2, 3

    For  the case, my prof. needs a short paper includes the assumptions,  recommendations and something which need to be write. The most important  is the spreed sheet. All equivelants are required. Such as how you get  the NET INCOME, NPV, IRR OR ROE, etc.  It cannot be just numbers. You  should use the functions in excel to got that.

    If  you need to compare how one number affects to whole data. You will need  to duplicate the whole table below the original one, and highlight that  number and the changes you got. You'd better to write a short  comparisons next to those two tables or three tables depends on your  decision, and write the comprehensive stuffs in your paper.

    Please  read the PPT 03a &03b, and the Disnrey case which will helps your  case. also, there are some videos post by the author of our textbook on  the Youtobe. It will helps you to understand what we talked in class

Case – Description – FIN630.docx

The Case

Nike, which currently views itself as operating in the sporting wear (shoes and clothes) segment, is considering an expansion into the fashion apparel business, producing high-priced casual clothing for teenagers and young adults. You have been asked to collect the data to make the assessment and have come back with the following information:

1. You estimate that is will cost Nike $2.5 billion to get started in this business. Of this, $1 billion will have to be spent acquiring land and other assets needed for the business. The remaining $1.5 billion will be spent in one year. The business will be operational at the .

2. The $1.5 billion invested in one year will be depreciated over the following 10 years on a straight-line basis. (The $1 billion invested today will not be depreciated.)

3. You have hired a market-testing company to do a market study. Their initial study, which has already been , cost $250 million and has provided you with a sense of the market and Nike’s potential place in it.

4. The total revenue for the casual apparel industry is estimated to be $75 billion currently, and should grow at 5% per year. Nike is expected to gain a 2% share in the first year it enters the market (which will be the third year), and to increase its market share by 0.5% a year to a maximum of 5% in the ninth year. After that point, Nike’s revenues are expected to grow at the same rate as the overall market. (The template I have provided includes the computations associated with this point.)

5. Nike expects to generate 50% of the apparel revenue in the United States, 30% from China, and 20% from India.

6. The cost of goods sold are expected to be 77% of revenues.

7. Nike will allocate 5% of project revenues to the new apparel division as general and administrative expenses. If it takes this project, Nike expects it will have to increase company-wide general and administrative costs by $50 million in year 3 when the new project starts generating revenue. This number will grow with project revenues.

8. Nike expects to spend $70 million on advertising for the new division in year 3, and advertising expenses for the division are expected to grow at 4% per year thereafter.

9. The apparel division will create working capital needs:

a. The sale of apparel on credit to large retailers will create accounts receivable equal to 5% of revenues.

b. Inventory (both raw and finished goods) will be 10% of cost of goods sold.

c. Credit offered by suppliers will be 7.5% of cost of goods sold.

d. All of these working capital investments will have to be made at the of the year in which the goods are sold.

10. The beta for Nike is 0.72, calculated using monthly returns over the last 3 years and against the S&P 500 index.

11. The current stock price is $82 and there are 1.26 billion shares outstanding.

12. Nike is currently rated A+ and A+ rated bonds trade at a default spread of 1.0% over the long-term U.S. treasury bond rate. Nike’s interest bearing debt (short and long term) has an average maturity of 5 years. The book value of the debt is $3,500 million and last year, the company’s interest expense was $124 million. Nike also has lease commitments as follows:

Years out

Operating Lease Commitments (in $million)

Next year

589

Year 2

523

Year 3

472

Year 4

412

Year 5

361

Thereafter

1,608

13. Nike’s historical effective tax rate is 24%, but its marginal tax rate is 21%.

14. The current long-term U.S. Treasury bond rate is 1.52%, and the expected inflation rate is 2%. For the equity risk premiums you can use, the numbers for 2019 found here: http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/ctryprem.html.

Case – World Apparel Company Data – 2019.xlsx

Sheet1

Company Name Exchange:Ticker Industry Group Country Broad Group Sub Group Market Cap (in US $) PV of lease debt Total Debt Total Debt incl leases (in US $) Firm Value (in US $) Cash Enterprise Value (in US $) Cash/ Firm Value Beta Marginal Tax Rate unlevered cash corrected
Ming Le Sports AG (DB:ML2) DB:ML2 Apparel Germany Developed Europe EU & Environs $0.78 $0.00 $0.00 $0.00 $0.78 $2.54 -$1.77 327.74% 3.25 15.00% 3.2525806452 -1.4281869688
KBS Fashion Group Limited (NasdaqCM:KBSF) NasdaqCM:KBSF Apparel China Emerging Markets China $6.60 $1.85 $2.01 $3.86 $10.46 $24.10 -$13.64 230.31% 2.73 25.00% 1.8989135879 -1.4572820534
Maruhachi Holdings Co., Ltd. (NSE:3504) NSE:3504 Apparel Japan Japan Japan $111.80 $0.00 $61.70 $61.70 $173.50 $240.80 -$67.30 138.79% 0.62 30.86% 0.449385648 -1.158520207
Weiqiao Textile Company Limited (SEHK:2698) SEHK:2698 Apparel China Emerging Markets China $404.20 $26.18 $1,054.90 $1,081.08 $1,485.28 $1,997.10 -$511.82 134.46% 1.82 25.00% 0.6063063176 -1.7594789691
FUJIX Ltd. (TSE:3600) TSE:3600 Apparel Japan Japan Japan $23.70 $0.00 $0.00 $0.00 $23.70 $27.40 -$3.70 115.61% 0.35 30.86% 0.3492755102 -2.237251241
Tsutsumi Jewelry Co., Ltd. (TSE:7937) TSE:7937 Apparel Japan Japan Japan $292.30 $0.48 $0.00 $0.48 $292.78 $337.10 -$44.32 115.14% 0.57 30.86% 0.5644567286 -3.7284093684
Barbara Bui SA (ENXTPA:BUI) ENXTPA:BUI Apparel France Developed Europe EU & Environs $5.40 $0.00 $0.63 $0.63 $6.03 $5.24 $0.79 86.91% -0.44 33.00% -0.4036886403 -3.0847133236
L & A International Holdings Limited (SEHK:8195) SEHK:8195 Apparel Hong Kong Emerging Markets China $5.72 $0.01 $0.00 $0.01 $5.73 $4.96 $0.77 86.53% -0.18 16.50% -0.18149793 -1.3477078185
Speedy Global Holdings Limited (SEHK:540) SEHK:540 Apparel China Emerging Markets China $23.80 $3.89 $4.44 $8.33 $32.13 $27.70 $4.43 86.21% 0.65 25.00% 0.5130692351 3.7214560394
Soko Seiren Co.,Ltd. (TSE:3578) TSE:3578 Apparel Japan Japan Japan $9.18 $0.00 $6.06 $6.06 $15.24 $12.40 $2.84 81.36% -0.26 30.86% -0.181302124 -0.9729029473
Fuji Corporation (JASDAQ:3515) JASDAQ:3515 Apparel Japan Japan Japan $23.50 $0.00 $7.86 $7.86 $31.36 $23.50 $7.86 74.94% 0.70 30.86% 0.5687345382 2.2691495062
Rajesh Exports Limited (NSEI:RAJESHEXPO) NSEI:RAJESHEXPO Apparel India Emerging Markets India $2,427.20 $0.00 $1,187.90 $1,187.90 $3,615.10 $2,475.70 $1,139.40 68.48% 0.30 35.00% 0.2271738607 0.7207795541
Continental Holdings Limited (SEHK:513) SEHK:513 Apparel Hong Kong Emerging Markets China $88.10 $0.53 $127.40 $127.93 $216.03 $143.80 $72.23 66.57% 1.94 16.50% 0.8785265527 2.6276162949
CSP International Fashion Group S.p.A. (BIT:CSP) BIT:CSP Apparel Italy Developed Europe EU & Environs $27.80 $0.00 $25.20 $25.20 $53.00 $33.50 $19.50 63.21% 1.48 24.00% 0.8757548546 2.3802567844
Reward Wool Industry Corporation (TSEC:1423) TSEC:1423 Apparel Taiwan Emerging Markets Small Asia $37.80 $0.00 $0.00 $0.00 $37.80 $23.00 $14.80 60.85% 0.36 20.00% 0.3615116279 0.9233202388
Renown Incorporated (TSE:3606) TSE:3606 Apparel Japan Japan Japan $86.10 $4.51 $27.80 $32.31 $118.41 $71.70 $46.71 60.55% 0.93 30.86% 0.7358906866 1.865549025
Zenith Fibres Limited (BSE:514266) BSE:514266 Apparel India Emerging Markets India $4.00 $0.00 $0.00 $0.00 $4.00 $2.36 $1.64 59.00% 0.40 35.00% 0.3988139535 0.9727169597
Sanyo Shokai Ltd. (TSE:8011) TSE:8011 Apparel Japan Japan Japan $204.60 $4.70 $80.70 $85.40 $290.00 $166.90 $123.10 57.55% 0.71 30.86% 0.5525179504 1.3016258515
Hifood Group Holdings Co., Limited (SEHK:442) SEHK:442 Apparel Hong Kong Emerging Markets China $48.50 $0.85 $0.00 $0.85 $49.35 $27.10 $22.25 54.91% 0.10 16.50% 0.0986704685 0.2188429527
Solar Company S.A. (WSE:SOL) WSE:SOL Apparel Poland Developed Europe EU & Environs $3.83 $0.00 $0.07 $0.07 $3.90 $2.13 $1.77 54.69% 0.80 19.00% 0.7852537114 1.7328970005
My Heart Bodibra Group Limited (SEHK:8297) SEHK:8297 Apparel Hong Kong Emerging Markets China $11.00 $2.32 $0.24 $2.56 $13.56 $7.27 $6.29 53.60% 0.32 16.50% 0.2654598226 0.5720525656
PCCS Group Berhad (KLSE:PCCS) KLSE:PCCS Apparel Malaysia Emerging Markets Small Asia $9.65 $3.58 $8.54 $12.12 $21.77 $11.60 $10.17 53.29% 2.53 24.00% 1.2929221588 2.7678167726
Pasupati Acrylon Limited (BSE:500456) BSE:500456 Apparel India Emerging Markets India $27.50 $0.00 $1.34 $1.34 $28.84 $14.80 $14.04 51.32% 0.38 35.00% 0.3657190072 0.7512347698
Piquadro S.p.A. (BIT:PQ) BIT:PQ Apparel Italy Developed Europe EU & Environs $96.40 $0.00 $27.50 $27.50 $123.90 $63.10 $60.80 50.93% 1.63 24.00% 1.3432454418 2.7373044447
Marushohotta Co.,Ltd. (TSE:8105) TSE:8105 Apparel Japan Japan Japan $37.70 $0.00 $0.00 $0.00 $37.70 $19.10 $18.60 50.66% 1.61 30.86% 1.6112244898 3.2657614659
Look Holdings Incorporated (TSE:8029) TSE:8029 Apparel Japan Japan Japan $67.50 $0.10 $24.10 $24.20 $91.70 $45.90 $45.80 50.05% 0.98 30.86% 0.7824355464 1.5665527192
Interma Trade S.A. (WSE:ITM) WSE:ITM Apparel Poland Developed Europe EU & Environs $4.48 $0.00 $0.22 $0.22 $4.70 $2.33 $2.37 49.62% -0.15 19.00% -0.1470631119 -0.2918885771
Atsugi Co., Ltd. (TSE:3529) TSE:3529 Apparel Japan Japan Japan $139.30 $0.00 $0.00 $0.00 $139.30 $68.60 $70.70 49.25% 0.51 30.86% 0.5132346939 1.0112247929
Topbi International Holdings Limited (TSEC:2929) TSEC:2929 Apparel Taiwan Emerging Markets Small Asia $224.20 $0.12 $32.50 $32.62 $256.82 $124.00 $132.82 48.28% 1.00 20.00% 0.8968030792 1.7340560969
Estelle Holdings Co.,Ltd. (TSE:7872) TSE:7872 Apparel Japan Japan Japan $62.30 $0.92 $95.00 $95.92 $158.22 $76.10 $82.12 48.10% 0.70 30.86% 0.3402280464 0.6555011121
Yamato International Inc. (TSE:8127) TSE:8127 Apparel Japan Japan Japan $75.20 $0.00 $8.63 $8.63 $83.83 $40.30 $43.53 48.07% 0.71 30.86% 0.6579573101 1.2670930692
Jiangsu Sanfangxiang Industry Co., Ltd (SHSE:600370) SHSE:600370 Apparel China Emerging Markets China $336.20 $0.00 $0.00 $0.00 $336.20 $156.80 $179.40 46.64% 1.22 25.00% 1.2221860465 2.2904066267
China Ting Group Holdings Limited (SEHK:3398) SEHK:3398 Apparel Hong Kong Emerging Markets China $101.90 $2.83 $43.50 $46.33 $148.23 $68.80 $79.43 46.41% 0.65 16.50% 0.4717647844 0.8804022136
Xingye Leather Technology Co., Ltd. (SZSE:002674) SZSE:002674 Apparel China Emerging Markets China $333.40 $0.00 $14.60 $14.60 $348.00 $157.00 $191.00 45.11% 1.45 25.00% 1.4065708294 2.5627573227
Sakai Ovex Co.,Ltd. (TSE:3408) TSE:3408 Apparel Japan Japan Japan $103.10 $0.00 $22.80 $22.80 $125.90 $55.90 $70.00 44.40% 1.09 30.86% 0.9462213563 1.7018466965
Youngone Holdings Co., Ltd. (KOSE:A009970) KOSE:A009970 Apparel South Korea Emerging Markets Small Asia $650.60 $0.00 $465.70 $465.70 $1,116.30 $484.70 $631.60 43.42% 0.23 28.00% 0.1532200314 0.2708035483
Victory City International Holdings Limited (SEHK:539) SEHK:539 Apparel Hong Kong Emerging Markets China $68.10 $2.71 $700.60 $703.31 $771.41 $333.50 $437.91 43.23% 1.50 16.50% 0.1553623357 0.2736816427
Ginza Yamagataya Co., Ltd. (JASDAQ:8215) JASDAQ:8215 Apparel Japan Japan Japan $27.00 $0.00 $0.00 $0.00 $27.00 $11.60 $15.40 42.96% 0.11 30.86% 0.1134693878 0.1989398357
AZEARTH Corporation (TSE:3161) TSE:3161 Apparel Japan Japan Japan $21.90 $0.00 $1.06 $1.06 $22.96 $9.72 $13.24 42.33% 0.46 30.86% 0.4483036312 0.7774207985
Rhythm Watch Co., Ltd. (TSE:7769) TSE:7769 Apparel Japan Japan Japan $142.20 $1.82 $49.30 $51.12 $193.32 $81.80 $111.52 42.31% 0.66 30.86% 0.5270036837 0.9135511419
J. A. Textile Mills Limited (KASE:JATM) KASE:JATM Apparel Pakistan Emerging Markets Small Asia $0.45 $0.00 $0.01 $0.01 $0.46 $0.19 $0.27 41.87% 0.02 30.00% 0.016884299 0.0290435144
MRK Holdings Inc. (TSE:9980) TSE:9980 Apparel Japan Japan Japan $129.40 $0.00 $0.10 $0.10 $129.50 $53.90 $75.60 41.62% 1.37 30.86% 1.3642929104 2.3370218265
Yangtzekiang Garment Limited (SEHK:294) SEHK:294 Apparel Hong Kong Emerging Markets China $81.80 $0.29 $0.00 $0.29 $82.09 $34.10 $47.99 41.54% 0.01 16.50% 0.0129156399 0.0220935966
Sun Hing Vision Group Holdings Limited (SEHK:125) SEHK:125 Apparel Hong Kong Emerging Markets China $89.30 $5.66 $6.07 $11.73 $101.03 $41.00 $60.03 40.58% 0.71 16.50% 0.6387412286 1.0750067022
Saibo Co., Ltd. (TSE:3123) TSE:3123 Apparel Japan Japan Japan $48.40 $0.00 $18.70 $18.70 $67.10 $26.50 $40.60 39.49% 0.49 30.86% 0.3857337518 0.6375057819
361 Degrees International Limited (SEHK:1361) SEHK:1361 Apparel China Emerging Markets China $430.30 $1.16 $411.40 $412.56 $842.86 $323.40 $519.46 38.37% 2.72 25.00% 1.5827893555 2.5681933294
Thai Toray Textile Mills Public Company Limited (SET:TTTM) SET:TTTM Apparel Thailand Emerging Markets Small Asia $37.60 $0.00 $0.00 $0.00 $37.60 $14.40 $23.20 38.30% 0.33 20.00% 0.3324883721 0.5388604651
TBH Global Co., Ltd (KOSE:A084870) KOSE:A084870 Apparel South Korea Emerging Markets Small Asia $55.90 $0.00 $76.90 $76.90 $132.80 $50.40 $82.40 37.95% 1.40 28.00% 0.7028211166 1.1327019937
Source Industries (India) Limited (BSE:521036) BSE:521036 Apparel India Emerging Markets India $0.15 $0.00 $0.03 $0.03 $0.18 $0.07 $0.11 37.91% 0.39 35.00% 0.3463263377 0.5577999421
Nan Yang Dyeing & Finishing Co.,Ltd (TSEC:1410) TSEC:1410 Apparel Taiwan Emerging Markets Small Asia $45.00 $0.00 $0.00 $0.00 $45.00 $16.90 $28.10 37.56% 0.23 20.00% 0.2303953488 0.368960523
Tokai Senko K.K. (TSE:3577) TSE:3577 Apparel Japan Japan Japan $28.80 $0.00 $17.50 $17.50 $46.30 $17.10 $29.20 36.93% 0.59 30.86% 0.4140131447 0.656466048
CEFC Hong Kong Financial Investment Company Limited (SEHK:1520) SEHK:1520 Apparel Hong Kong Emerging Markets China $43.20 $1.45 $0.07 $1.52 $44.72 $16.50 $28.22 36.89% 2.02 16.50% 1.9666255079 3.1163800309
Baroque Japan Limited (TSE:3548) TSE:3548 Apparel Japan Japan Japan $303.80 $0.00 $96.50 $96.50 $400.30 $146.10 $254.20 36.50% 0.79 30.86% 0.6439450923 1.014048861
Xtep International Holdings Limited (SEHK:1368) SEHK:1368 Apparel China Emerging Markets China $1,205.50 $3.66 $298.80 $302.46 $1,507.96 $547.90 $960.06 36.33% 1.10 25.00% 0.9259876318 1.4544454521
Morito Co., Ltd. (TSE:9837) TSE:9837 Apparel Japan Japan Japan $197.90 $3.65 $41.20 $44.85 $242.75 $87.60 $155.15 36.09% 0.81 30.86% 0.7020722468 1.0984828167
Matsuoka Corporation (TSE:3611) TSE:3611 Apparel Japan Japan Japan $240.20 $0.00 $71.30 $71.30 $311.50 $111.30 $200.20 35.73% 0.91 30.86% 0.7553205029 1.1752364468
Voith Paper Fabrics India Limited (BSE:522122) BSE:522122 Apparel India Emerging Markets India $49.60 $0.00 $0.00 $0.00 $49.60 $17.00 $32.60 34.27% 0.65 35.00% 0.6463953488 0.983472678
China Outfitters Holdings Limited (SEHK:1146) SEHK:1146 Apparel China Emerging Markets China $99.00 $0.64 $0.00 $0.64 $99.64 $34.00 $65.64 34.12% -0.11 25.00% -0.1046068464 -0.1587884291
Ratti S.p.A. (BIT:RAT) BIT:RAT Apparel Italy Developed Europe EU & Environs $88.60 $0.00 $43.90 $43.90 $132.50 $45.20 $87.30 34.11% 0.58 24.00% 0.4194979005 0.6366949807
Greatime International Holdings Limited (SEHK:844) SEHK:844 Apparel Hong Kong Emerging Markets China $46.10 $0.67 $15.30 $15.97 $62.07 $20.50 $41.57 33.03% 2.86 16.50% 2.2213596369 3.316783643
Win Hanverky Holdings Limited (SEHK:3322) SEHK:3322 Apparel Hong Kong Emerging Markets China $126.30 $46.97 $46.60 $93.57 $219.87 $72.00 $147.87 32.75% 1.86 16.50% 1.1489353944 1.7083609882
Nippon Felt Co., Ltd. (TSE:3512) TSE:3512 Apparel Japan Japan Japan $79.30 $0.00 $10.30 $10.30 $89.60 $29.30 $60.30 32.70% 0.56 30.86% 0.5166630576 0.767711608
Chargeurs SA (ENXTPA:CRI) ENXTPA:CRI Apparel France Developed Europe EU & Environs $444.40 $12.01 $244.50 $256.51 $700.91 $228.60 $472.31 32.61% 2.58 33.00% 1.8597879403 2.7599240618
Prolexus Berhad (KLSE:PRLEXUS) KLSE:PRLEXUS Apparel Malaysia Emerging Markets Small Asia $23.20 $0.00 $22.00 $22.00 $45.20 $14.60 $30.60 32.30% 0.42 24.00% 0.2450207392 0.3619260591
Shinih Enterprise Co., Ltd. (TSEC:9944) TSEC:9944 Apparel Taiwan Emerging Markets Small Asia $58.10 $2.74 $55.30 $58.04 $116.14 $37.10 $79.04 31.94% 0.68 20.00% 0.3776635986 0.55492977
Texwinca Holdings Limited (SEHK:321) SEHK:321 Apparel Hong Kong Emerging Markets China $451.70 $131.11 $150.10 $281.21 $732.91 $230.30 $502.61 31.42% 1.27 16.50% 0.8342053481 1.2164428931
Nien Hsing Textile Co., Ltd. (TSEC:1451) TSEC:1451 Apparel Taiwan Emerging Markets Small Asia $167.00 $0.00 $37.70 $37.70 $204.70 $63.90 $140.80 31.22% 0.56 20.00% 0.4778615644 0.6947319762
Kohsai Co.,Ltd. (JASDAQ:7878) JASDAQ:7878 Apparel Japan Japan Japan $8.55 $0.00 $3.15 $3.15 $11.70 $3.61 $8.09 30.85% 0.17 30.86% 0.1386024674 0.2004510344
Cosmo Lady (China) Holdings Company Limited (SEHK:2298) SEHK:2298 Apparel China Emerging Markets China $792.30 $68.21 $28.50 $96.71 $889.01 $274.10 $614.91 30.83% 0.91 25.00% 0.8329743505 1.2042762962
Levi Strauss Japan Kabushiki Kaisha (JASDAQ:9836) JASDAQ:9836 Apparel Japan Japan Japan $64.10 $2.78 $0.00 $2.78 $66.88 $20.50 $46.38 30.65% 0.23 30.86% 0.2195388651 0.3165657519
Singtex Industrial Co., Ltd. (GTSM:4433) GTSM:4433 Apparel Taiwan Emerging Markets Small Asia $28.20 $0.79 $13.50 $14.29 $42.49 $13.00 $29.49 30.60% -0.01 20.00% -0.0086053807 -0.0123993391
Binh Thanh Import Export Production and Trade Joint Stock Company (HOSE:GIL) HOSE:GIL Apparel Vietnam Emerging Markets Small Asia $25.30 $0.00 $29.20 $29.20 $54.50 $16.60 $37.90 30.46% 0.43 20.00% 0.2212743383 0.3181913308
Zenith Exports Limited (BSE:512553) BSE:512553 Apparel India Emerging Markets India $3.36 $0.00 $1.36 $1.36 $4.72 $1.42 $3.30 30.08% 1.71 35.00% 1.3574810951 1.9416093238
Safilo Group S.p.A. (BIT:SFL) BIT:SFL Apparel Italy Developed Europe EU & Environs $50.20 $60.77 $331.40 $392.17 $442.37 $131.80 $310.57 29.79% 1.80 24.00% 0.2591609542 0.3