Nike Financial Report: Financial Ratios and Financial Statements Analyzed

Expert Nike Financial Report & Analysis

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Hey All,

Thanks for visiting my Nike Financial Report page. On this page, you will be able to find preliminary information about Nike's current financial performance as well as some historical track records and trends. 

For a more detailed examination of Nike's financial performance, please check out the "Financial Report".  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 were I use plain English to explain concepts.

Enjoy the preliminary information and for a more detailed analysis, buy the financial report!

Sincerely,

Paul, MBA.

Nike Financial Report by Paul Borosky, MBA.
  • Company Report comes with a 7-day Limited 100% MONEY BACK GUARANTEE.
  • Free Bonus Downloads: Annual Statements for the Last Five Years (10k reports)!

Sample Financial Report

Sample Financial Report by Paul Borosky, MBA.
Financial Report Sample 2

Nike: Brief Summary

Nike designs, creates, and sells sportswear such as sneakers, clothing, sporting equipment, and other athletic type products. Nike's headquarters in the US is at One Bowerman Dr. in Beaverton, OR. 97005.  The company competes in the customer cyclical business sector.  As for the industry, the organization competes in the footwear and accessories industry.  At present, Nike employs about 77,000 individuals.

As for Nike's financial statements, financial ratios, and overall financial well-being, the company's 52-week stock range has fluctuated between $60 to $105.62.  At present, their stock price is $90.94, which is at the higher end of their 52-week range.  The organization's beta is .76.  Because it is below 1.0, this indicates that the firm is less risky as compared to the overall market.  The last dividend paid out by Nike was May 29.  Their current dividend yield is about 1.08%.

Nike Financial Report Sources

“Nike 2019 Financial Report: Financial Statements and Financial Ratios: Defined, Discussed, and Analyzed for 5 Years” was written by, Paul Borosky, MBA. and owner of Quality Business Plan.  In this report, I used Nike's 2018 10k, Nike's 2017 10k annual report, 2016 10k annual report, 2015 10k annual report, and Nike's 2019 10k annual report as the basis for information gathering. 

Section 1: Nike Income Statement Analyzed 2015 to 2019

In this section, I walk through a broad definition as to what an income statement is and why it is important.  From this, I then discuss and define income statement line items, such as revenues, gross profits, etc. in detail.  After each line item is defined and discussed, I finally offer a summary analysis of Nike's important income statement line item trends from 2015 to 2019, in most cases.

Nike Revenue Growth.

Nike ended 2015 with revenues at approximately $30.6 billion.  In the next five years, the firm would grow revenues steadily to 39.1 billion.  On average, this is a 6.3% growth rate.  For a mature company, this is quite respectable.  However, it also shows that the firm is not a huge disruptor in the industry.  Almost boring.

Nike COGS

Nike had a cost of goods of approximately $16.5 billion in 2015.  In the next several years, the company would grow its cost of goods to $21.6 billion.  As a percentage of revenues, the cost of goods fluctuated between 53.8% in 2016 to 56.2% in 2018.  This shows that the company has a tight range from which they operate their cost of goods.  Unfortunately, the average cost of goods growth rate was 7%.  This is substantially higher as compared to the average annual growth rate for revenues.  This shows that the company is not able to pass on their increased cost of goods to customers.  A possible reason for this could be that they operate in an extremely competitive industry.  Not a long term sustainable strategy.

Nike Income Statement 2019

Column1 2019 2018 2017 2016 2015
Revenues                    39,117                    36,397                    34,350                    32,376                      30,601
COGS                    21,643                    20,441                    19,038                    17,405                      16,534
Gross Profit                    17,474                    15,956                    15,312                    49,781                      47,135
SG&A                    12,702                    11,511                    10,563                    10,469                        9,892
Depreciation                         705                         747                         706                         649                           606
R & D                            -                            -                            -                            -                             -
Other                            -                            -                            -                            -                             -
Operating Expenses                    13,407                    12,258                    11,269                    11,118                      10,498
EBIT                      4,850                      4,379                      4,945                      4,642                        4,233
Other Income                            -                            -                            -                            -                             -
Interest Expense                           49                           54                           59                           19                             28
EBT                      4,801                      4,325                      4,886                      4,623                        4,205
Taxes                         772                      2,392                         646                         863                           932
Net Income                     4,029                     1,933                     4,240                     3,760                      3,273

Section 2: Nike Balance Sheet Analyzed from 2015 to 2019

For Nike's balance sheet, I again go through each important line item from the balance sheet.  In reviewing each line item, I will define Nike's balance sheet line items, such as cash, property, plant and equipment, and liabilities between 2015 to 2019.  Next, I then offer a summary analysis of Nike's important balance sheet line items.

Nike's Short-term Investments.

Nike ended its short-term investment position in 2015 at $2.0 billion.  In the next two years, their short-term investment position would increase to $2.4 billion in 2017.  However, in the following two years, 2018 and 2019, their short-term investment position would fall to 996 million and $197 million prospectively.  This shows that the firm may be running into liquidity issues.  It could also mean that the company is relying more upon equity financing for growth as compared to taking out more debt through bonded issuances.

Inventory.

Nike ended 2015 with $4.3 billion in inventory.  In the next several years, ending in 2018, they would substantially increase their inventory holdings to $5.2 billion.  In 2019, they would moderately increase its inventory to approximately $5.6 billion.  On the surface, it does seem like Nike is holding substantial inventory.  However, when you compare the inventory holding to sales, the inventory position would fall in the range between 14.2% to 14.9% as compared to sales.  For a large organization such as this, this is a pretty narrow range for inventory.  In my opinion, this indicates that the company has honed its inventory strategy to reflect a well-balanced practice ensuring adequate supply while not overdoing it with storage space.

Nike Summary Balance Sheet 2019

Column1 2019 2018 2017 2016 2015
Cash                        4,466                    4,249                    3,808                    3,138                    3,852
Short Term Investment                           197                       996                    2,371                    2,319                    2,072
Account Receivable                        4,272                    3,498                    3,677                    3,241                    3,358
Inventory                        5,622                    5,261                    5,055                    4,838                    4,337
Other                              -                         -                         -                         -                         -
Current Assets                    16,525                15,134                16,061                15,025                15,976
Net PPE                        4,744                    4,454                    3,989                    3,520                    3,011
Goodwill                           154                       154                       139                       131                       131
Other                              -                         -                         -                         -                         -
Total Assets                    23,717                22,536                23,259                21,379                21,600
Accounts Payable                        2,612                  22,779                    2,048                    2,191                    2,131
Accrued Expense                        5,010                    3,269                    3,011                    3,037                    3,951
Accrued Taxes                           229                       150                         84                         85                         71
Notes Payable                               9                       336                       325                           1                         74
LT Debt - Current                               6                           6                           6                         44                       107
Other                              -                         -                         -                         -                         -
Total Current Liabilities                        7,866                    6,040                  23,259                  21,379                    6,334
LT Debt                        3,464                    3,468                    3,471                    1,993                    1,079
Other                              -                         -                         -                         -                         -
Total Liabilities                    14,677                12,724                10,852                  9,121                  8,893
Common Stock                        7,163                    6,384                    8,638                    7,786                    6,773
Treasury                              -                         -                         -                         -                         -
Retained Earnings                        1,643                    3,517                    3,979                    4,151                    4,685
Other                              -                         -                         -                         -                         -
Total Equity                       9,040                  9,812                12,407                12,258                12,707
Total Equity & Liability                    23,717                22,536                23,259                21,379                21,600

Section 3: Nike Financial Ratios Analyzed from 2015 to 2019

For this section, I have chosen several different financial ratios to review for Nike from 2015 to 2019.  In reviewing each of Nike's financial ratios, I first start with defining the financial ratio.  Next, I supply the financial formula for calculating the specific ratio.  Finally, I offer a brief analysis of Nike's Important Financial ratios. 

Nike Current Ratio:

Nike's current ratio ended 2015 at 2.52.  In the next two years, the current ratio position would fall to .69 in 2017.  This indicates that the firm did not have substantial current assets to cover its current projected liabilities.  In 2018 and 2019, the organization's current ratio would rebound to 2.51 and 2.10 prospectively.  This shows that the firm actually has too much current assets as compared to current liabilities.  To improve upon Nike's current ratio, the organization should either reduce their accounts receivable position or lower their inventory holding.  Sensed Nike's inventory holding seems to work well for the firm; the choice for improvement would fall on the Accounts Receivable department.

Nike Total Asset Turnover:

Nike's total asset turnover ended in 2015 at 1.42.  In the next several years, the total asset turnover would improve to 1.6.  This shows that the firm is slowly but surely improving the usage of its assets under management.  However, directly impacting the total asset turnover would be Nike's fixed asset turnover, which has steadily been decreasing from 10.1 in 2015 to 8.2 and 2019.  This indicates that for Nike to improve its total asset turnover, they need to focus on either increasing their fixed asset usage or selling underutilized property and equipment.

Nike Return on Assets:

Nike's return on assets ended 2015 at 15.1%.  In the next two years, their return on assets would grow moderately to 18.2% in 2017.  However, in 2018, the return on assets would fall to 8.5% only to rebound in 2019 to 16.99%.  The fluctuations in return on assets show that there was some activity in their operations that had inverse impacts on the company in 2018.  As an investor, 2020's return on assets should be watched closely.  If the trend continues to improve, then this indicates that 2018's drop in return on assets was a fluke.  However, if the return on assets falls again, then this may indicate that management has not identified business models that are optimal for their organization.  In other words, more fluctuation would indicate that the company is facing external environmental changes that are not being optimally responded to in their internal environment.

Nike Debt ratio.

Nike's debt ratio in 2015 was 5.0%.  In the next four years, their debt ratio would steadily grow to 15.4% in 2018.  However, in 2019, their debt ratio would fall slightly to 14.6%.  From the perspective of risk, having such a low debt ratio is excellent.  This means that in the event of a recession, the organization has financing opportunities available.  From a growth perspective, this shows that the company has relatively little confidence in their ability to generate excess monies from borrowed funds.  Another way of saying this is that the company may be running out of good ideas for growth, and they are playing it safe by not taking out too much debt.

Nike Liquidity Ratios 2019

Ratios 2019 2018 2017 2016 2015
Current Ratio                           2.10                    2.51
Cash Ratio                           0.57                    0.70
Quick Ratio                           1.39                    1.63
Net Working Capital                         6,509              (13,190)

Nike Asset Utilization 2019

Ratios 2019 2018 2017 2016 2015
Total Asset Turnover                           1.65                    1.62
Fixed Asset Turnover                           8.25                    8.17
Days Sales Outstanding                         39.86                  35.08
Inventory Turnover                           6.96                    6.92
Accounts Receivable Turnover                           9.16                  10.41
Working Capital Turnover                           6.01                  (2.76)
AP Turnover                         14.98                    1.60
Average Days Inventory                           0.02                    0.02
Average Days Payable                           0.04                    0.00

Nike Profitability Ratios 2019

Ratios 2019 2018 2017 2016 2015
Return on Assets 16.99% 8.58%
44.57% 19.70%
Net Profit Margin 10.30% 5.31%
Gross Profit Margin 44.67% 43.84%
Operating Profit Margin 12.40% 12.03%
Basic Earning Power 20.45% 19.43%
ROCE 30.60% 26.55%
Capital Employed                       15,851                16,496
ROIC 36.17% -22.40%
Long-term Debt
Ratios 2019 2018 2017 2016 2015
Debt Ratio 14.61% 15.39%
Debt/Equity 38.32% 35.34%
Times Interest Earned                         98.98                  81.09