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.
Sample Report
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 |
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| 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 |
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|
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 |
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| Ratios | 2020 | 2019 | 2018 | 2017 | 2016 |
| Current Ratio |
2.48 |
2.10 |
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| Cash Ratio |
1.01 |
0.57 |
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| Quick Ratio |
1.59 |
1.39 |
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| Net Working Capital |
10,876 |
6,509 |
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Nike Asset Utilization |
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| Ratios | 2020 | 2019 | 2018 | 2017 | 2016 |
| Total Asset Turnover |
1.19 |
1.65 |
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| Fixed Asset Turnover |
7.69 |
8.25 |
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| Days Sales Outstanding |
26.83 |
39.86 |
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| Inventory Turnover |
5.08 |
6.96 |
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| Accounts Receivable Turnover |
13.61 |
9.16 |
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| Working Capital Turnover |
3.44 |
6.01 |
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| AP Turnover |
16.64 |
14.98 |
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| Average Days Inventory |
127.07 |
94.81 |
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| Average Days Payable |
38.77 |
44.05 |
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| Cash Conversion Cycle |
115.12 |
90.62 |
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Nike Profitability Ratios |
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| Ratios | 2020 | 2019 | 2018 | 2017 | 2016 |
| Return on Assets |
8.10% |
16.99% |
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| Return on Equity |
31.52% |
44.57% |
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| Net Profit Margin |
6.79% |
10.30% |
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| Gross Profit Margin |
43.42% |
44.67% |
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| Operating Profit Margin |
7.96% |
12.40% |
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| Basic Earning Power |
9.50% |
20.45% |
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| ROCE |
12.91% |
30.60% |
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| Capital Employed |
23,058 |
15,851 |
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| ROIC |
16.63% |
36.17% |
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Nike Long-term Debt |
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| Ratios | 2020 | 2019 | 2018 | 2017 | 2016 |
| Debt Ratio |
30.01% |
14.61% |
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| Debt/Equity |
116.77% |
38.32% |
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| Times Interest Earned |
33.44 |
98.98 |
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