Liquidity, Solvency, and Profitability of Nike and Adidas

Nike Vs. Adidas
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Nike and Adidas are the most prominent clothing and footwear design and retail brands globally; therefore, comparison between them highlight the efficacy of different operational philosophies. As such, this essay is a comparison of the liquidity, solvency, and profitability of both brands.
In 2021, Nike is a company that continues to generate significant earnings faster than the economy. In recent years, the business's growth is seen, for instance, 2019 which is the company's best year for revenue return. Fiscal 2019 ended with the company recording $39.1 billion in revenue, a 7% increase from the previous year. 2020 was a challenging year for Nike, as was with other companies due to Covid-19. Nike reported the fiscal first quarter's sales ending August 31 to be $10.6 billion, a 1% dip CITATION And20 \l 1033 (Cheng, 2020). Consequently, it experienced a YTD net income loss of -36.98% compared to -27.45% loss in the industry.
Likewise, Adidas managed to deliver strong results in 2019. Its net income from continuing operations rose 12% to € 1.918 billion. In 2020 however, the Sales (Revenue) Q/Q reported was a -6.96% reduction. Covid-19 might have affected the company more than Nike as its CEO predicted its sales to fall by 40%. The estimation is because the company saw more than a 90% drop in profits during the first three months of the yearCITATION Ell20 \l 1033 (Elliot, 2020). Despite this, it managed to record Net Income YTD/YTD of 12.30%, which was higher than Nike. However, its Net Income Q/Q is way lower at -15.06 compared to 12.20% for Nike.
Profitability analysis enables companies to measure the relevance and attractiveness of their stock. With 2019 being such as successful year for Nike, the gross profit margin saw an improvement from 2018 and the company's revenue. However, in 2020, the gross profit margin deteriorated to 43.42. Nike's net profit margin has been steadily declining since 2018, and 2020 was its lowest year yet. It recorded a net profit margin of 6.79%, which is a considerable drop considering only two months ago, it registered 12%. To combat the impact of Covid-19, the company doubled down on improving its technology, such as the SNKRS shoe- release app. The plan was to create excitement among sneakerheads, consequently attracting and keeping their customers.
Despite a rocky start to 2020 for Adidas, the company managed to record a strong recovery in the third quarter. Like Nike, Adidas adapted to E-commerce, and its sales went up by 51%, consequently increasing the full-price Share. For the third quatre, the company recorded a gross margin of 52.00%, considering the adverse FX and promotional activities conducted thought the year CITATION Adi20 \l 1033 (Adidas, 2020). Adidas managed to record 8.11% for the net profit margin, which is slightly higher than that of Nike at 6.79%.
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