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This discussion is derived from the "Analysis for Decision Making" ADM Section at the end of Chapter 3 and is being modified for our online discussion. ADM-3 asks us to look at recent data taken from Nike, Incorporated:

A) Determine the amount of change and percent of net income change from Year 1 to Year 2.

B) Determine the percentage relationship between net income and sales for Year 1 and Year 2.

When solving for A, finding the percent of change is a "horizontal analysis" problem, which takes the change in amount and divides it by the base year: $2,643 - $2,472 = 221 (the amount of change); $221/$2,472 = 8.9% of change (increase) from Year 1 to Year 2.

When solving for B, finding the percent relationship between net income and sales for Year 2 and Year 1 "vertical analysis" problems is discovered by, dividing net income by sales:

Year 1: $2,472/$25,313 = 9.76% (.0976)

Year 2: $2,693/$27,799 = 9.68% (.0968)

Discussion:

What conclusion can you draw from this analyses above?

Do you think that Nike's most recent "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!

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?

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