Nike Financial Analysis and Financial Ratios

Quality Business Consultant's financial analysis expert, Paul Borosky, MBA., doctoral candidate, and published author, has created proprietary financial models to help analyze Nike financial performance using Nike's summarized income statements and balance sheets for the last five years, 2016 to 2020, found in their Annual Reports and Nike's 10ks. 

Further, our financial model also calculates over 20 popular financial ratios, such as Nike current ratio, return on equity, and debt ratio. This information is the basis of our financial report, "Nike's Financial Report", where we offer insights into understanding Nike's financial standing through insightful financial analysis.

Nike's Financial Report and Annual Report

Nike Financial Report by Paul Borosky, MBA.

Hey All,

Thanks for considering my Nike Financial Report. In this report, you will be able to find preliminary information about Apple's current financial performance as well as some historical track records and trends. Also, in this report, written by myself, Paul Borosky, MBA., Doctoral Candidate, and published author, you will find:

  • Summarized income statement for the last 5 years.
  • Summarized balance sheet for the last 5 years.
  • Summary analysis by myself of important income statement, balance sheet, and financial ratio trends and other happenings.
  • Five year’s worth of over twenty common financial ratios presented with formulas, calculations, and analysis tips for each ratio.
  • Line by line description, explanation, and analysis tip for most financial statement line items and financial ratios.
  • Professional financial analysis tips provided in each section to help YOU conduct your OWN financial analysis!
  • Each section includes an “in other words” segment.  This is where I use plain English to explain concepts.

Sincerely,

Paul, MBA.

Learn More

Sample Report

Sample report 2
Financial Report Sample 1

Nike Income Statement Analysis Sample

In this section of the financial report, I walk you through a broad definition as to what an income statement is and why it is important.  From this, I then discuss and define important income statement line items, such as revenues, gross profits, etc. in detail.  Finally, I offer a summary analysis of the company's important income statement line item trends.  For example,...

Nike Cost of Goods Sold.

Nike's cost of goods ended in 2016 at $17.4 billion.  In the next three years, the organization's cost of goods would increase to $21.6 billion ending in 2019.  In 2020, the organization's cost of goods would decrease slightly, ending the year at $21.1 billion.  As compared to revenues, Nike's cost of goods in 2016 was 53.8% of revenues.  In the next two years, the organization's cost of goods as compared to revenues would increase to 56.2%.  Fortunately, though, in 2019, the organization's cost of goods would decline slightly to 55.3%.  Unfortunately, the organization's cost of goods as compared to revenues would jump up again to 56.6% of revenues in 2020.

This shows that the organization's costs for making and selling shoes are growing at a faster pace as compared to price growth.  Unfortunately, this strategy cannot continue in the long term.  Eventually, the company will either need to increase prices at a faster pace as compared to the cost of good growth or do a better job negotiating raw material costs with suppliers.

Nike 2020 Income Statement Summary

2020 2019 2018 2017 2016
Revenues                    37,403                    39,117                    36,397                    34,350                      32,376
COGS                    21,162                    21,643                    20,441                    19,038                      17,405
Gross Profit                    16,241                    17,474                    15,956                    15,312                      14,971
 
SG&A                    13,126                    12,702                    11,511                    10,563                      10,469
Depreciation                         721                         705                         747                         706                           649
R & D                            -                            -                            -                            -                             -
Other                            -                            -                            -                            -                             -
Operating Expenses                    13,847                    13,407                    12,258                    11,269                      11,118
EBIT                      2,976                      4,850                      4,379                      4,945                        4,642
Other Income                            -                            -                            -                             -
Interest Expense                           89                           49                           54                           59                             19
EBT                      2,887                      4,801                      4,325                      4,886                        4,623
Taxes                         348                         772                      2,392                         646                           863
Net Income                     2,539                     4,029                     1,933                     4,240                      3,760

Nike Balance Sheet Analysis Sample

In this section of the financial report, I walk you through a broad definition as to what a balance sheet is and why it is important.  From this, I then discuss and define important balance sheet line items, such as cash, inventory, etc. in detail.  Finally, I offer a summary analysis of the company's important balance sheet line item trends.  For example,...

Nike Property, Plant, and Equipment

Nike ended 2016 with $3.5 billion in property, plant, and equipment.  In the next three years, the organization would moderately grow its property, plant, and equipment, ending 2019 at $4.7 billion.  However, in 2020, the organization would only slightly grow its property, plant, and equipment ending the year at $4.8 billion. 

The moderate growth in previous years may have indicated that Nike executives expected above-average sales growth.  However, only expanding property, plant, and equipment in 2020 may indicate that executives now feel that sales growth may plateau in the near future.  In the next few years, if the organization starts to further invest in property, plant, and equipment, then investors may feel confident in future sustained revenue growth.  In contrast, if the organization reduces or continues to hold their property, plant, and equipment level in the next several years, then this shows a lack of confidence by the executive team in revenue growth.

Nike 2020 Summary Balance Sheet

2020

2019 2018 2017

2016

Cash                        8,348                    4,466                    4,249                    3,808                    3,138
Short Term Investment                           439                       197                       996                    2,371                    2,319
Account Receivable                        2,749                    4,272                    3,498                    3,677                    3,241
Inventory                        7,367                    5,622                    5,261                    5,055                    4,838
Other                              -                         -                         -                         -                         -
Current Assets                    20,556                16,525                15,134                16,061                15,025
Net PPE                        4,866                    4,744                    4,454                    3,989                    3,520
Goodwill                           223                       154                       154                       139                       131
Other                              -                         -                         -                         -                         -
Total Assets                    31,342                23,717                22,536                23,259                21,379
Accounts Payable                        2,248                    2,612                    2,279                    2,048                    2,191
Accrued Expense                        5,184                    5,010                    3,269                    3,011                    3,037
Accrued Taxes                           156                       229                       150                         84                         85
Notes Payable                           248                           9                       336                       325                           1
LT Debt - Current                               3                           6                           6                           6                         44
Other                              -                         -                         -                         -                         -
Total Current Liabilities                        8,284                    7,866                    6,040                    5,474                    5,358
LT Debt                        9,406                    3,464                    3,468                    3,471                    1,993
Other                              -                         -                         -                         -                         -
Total Liabilities                    23,287                14,677                12,724                10,852                  9,121
Common Stock                        8,302                    7,163                    6,384                    8,638                    7,786
Treasury                              -                         -                         -                         -                         -
Retained Earnings                         (191)                    1,643                    3,517                    3,979                    4,151
Other                              -                         -                         -                         -                         -
Total Equity                       8,055                  9,040                  9,812                12,407                12,258
Total Equity & Liability                    31,342                23,717                22,536                23,259                21,379

Nike Financial Ratios Sample

In this section of the financial report, I walk you through definitions of various popular financial ratios, how to calculate the ratios, formulas used, etc. Also, for some popular financial ratios, I provide brief explanations of what the ratios mean as it is related to the company.

Nike's Quick Ratio

The organization's quick ratio ended in 2016 at 1.9.  In the next year, the organization would moderately increase its quick ratio ending 2017 at 2.0.  Fortunately, in the next three years, the organization would moderately decrease its quick ratio ending 2020 at 1.5. 

Even at 1.5, the organization's quick ratio is too high.  Granted, a high quick ratio indicates that the firm does not carry a substantial amount of inventory.  This helps an organization avoid obsolescence through new product introductions.  However, this also indicates that the company is not optimally managing their current assets.  As stated previously, the organization needs to better utilize their current assets to ensure optimization in the sector.

Nike's Fixed Asset Turnover Ratio

The organization's fixed asset turnover ended in 2016 at 9.2.  In the next two years, ending 2018, the organization's fixed asset turnover would substantially fall to 8.1.  Fortunately, in 2019, the company's fixed asset turnover would bounce back to approximately 8.2.  However, in 2020, the organization's fixed asset turnover would again fall to a five-year low of 7.7. 

Nike's Return on Equity

Nike's return on equity ended 2016 at 30.6%.  In the next year, the organization would increase its return on equity ending the year at 34.1%.  However, in 2018, the organization would decrease substantially the return on equity ending the year at 19.7%.  Fortunately, in 2019, the organization would substantially increase the return on equity ending the year at 44.5%. Unfortunately, though, the organization would then again reduce the return on equity in 2020, ending the year at 31.5%.

Nike Liquidity Ratios

Ratios 2020 2019 2018 2017 2016
Current Ratio

                          2.48

                   2.10

Cash Ratio

                          1.01

                   0.57

Quick Ratio

                          1.59

                   1.39

Net Working Capital

                      10,876

                 6,509

Nike Asset Utilization

Ratios 2020 2019 2018 2017 2016
Total Asset Turnover

                          1.19

                   1.65

Fixed Asset Turnover

                          7.69

                   8.25

Days Sales Outstanding

                        26.83

                 39.86

Inventory Turnover

                          5.08

                   6.96

Accounts Receivable Turnover

                        13.61

                   9.16

Working Capital Turnover

                          3.44

                   6.01

AP Turnover

                        16.64

                 14.98

Average Days Inventory

                      127.07

                 94.81

Average Days Payable

                        38.77

                 44.05

Cash Conversion Cycle

                      115.12

                 90.62

Nike Profitability Ratios

Ratios 2020 2019 2018 2017 2016
Return on Assets

8.10%

16.99%

Return on Equity

31.52%

44.57%

Net Profit Margin

6.79%

10.30%

Gross Profit Margin

43.42%

44.67%

Operating Profit Margin

7.96%

12.40%

Basic Earning Power

9.50%

20.45%

ROCE

12.91%

30.60%

Capital Employed

                      23,058

               15,851

ROIC

16.63%

36.17%

Nike Long-term Debt

Ratios 2020 2019 2018 2017 2016
Debt Ratio

30.01%

14.61%

Debt/Equity

116.77%

38.32%

Times Interest Earned

                        33.44

                 98.98