How to measure financial ratios of different companies?
These differences have affected the comparability of financial ratios across the two companies in many ways such as the treatment of acquired intangible assets helps illustrate why IFRS is considered more principle-based. However, under U.S. GAAP, the intangible assets are recognized at fair value, while under IFRS, it is only recognized if the asset will have a future economic benefit and has a measured reliability making it difficult to compare the both together.
For inventory ratios Adidas are likely to have used the last-in, first-out (LIFO) method for accounting for inventory costs is not allowed. For Nike, either LIFO or first-in, first-out (FIFO) inventory estimates were used. The move to a single method of inventory costing could lead to enhanced comparability between countries and remove the need for analysts to adjust LIFO inventories in their comparative analysis.