Nike Financial Report: Financial Ratios and Financial Statements Analyzed
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 the 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 are 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.
Enjoy the preliminary information and for a more detailed analysis, buy the financial report!
Sincerely,
Paul, MBA. (Updated 2020)
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Sample Financial Report
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 75,000 individuals.
Nike Financial Report Sources
“Nike 2020 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, 2020 10k annual report, and Nike's 2019 10k annual report as the basis for information gathering.
Section 1: Nike Income Statement Analyzed 2016 to 2020
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 2016 to 2020, in most cases.
Nike Revenue Growth.
Nike ended 2016 with revenues at approximately $32.3 billion. In the next five years, the firm would grow revenues steadily to $39.1 billion ending in 2019. However, in 2020, their revenues dipped to $37.4 billion. The recent dip in revenues may be attributed to the Covid 19, which disrupted the economy in early 2020. On average, this is a 3.8% growth rate. For a mature company, this is quite respectable. However, it also shows that the firm is not a massive disruptor in the industry. Almost boring.
Nike COGS
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.
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 |
Section 2: Nike Balance Sheet Analyzed from 2016 to 2020
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 2016 to 2020. Next, I then offer a summary analysis of Nike's important balance sheet line items.
Nike's Short-term Investments.
Nike had approximately $2.3 billion in short-term investments in 2016. In the next year, the organization would slightly increase their short-term investments ending 2017 with $2.3 billion. However, in the next two years, the organization would drastically reduce their short-term investments ending 2019 at $197 million. Even though the firm did slightly increase its short-term investments in 2020, ending the year at $439 million, the substantial amount of cash shows that the firm is not optimally exploiting this current asset.
Inventory.
Nike's inventory in 2016 was $4.8 billion. In the next three years, the organization would moderately increase their inventory holding ending 2019 at $5.6 billion. However, in 2020, the firm would greatly increase its inventory, ending the year at $7.3 billion. The substantial increase in inventory may be due to the Covid 19 pandemic impacting the marketplace. From an investor's perspective, inventory holding should be reduced in the next couple of years. If the inventory holding, as compared to sales, does not fall, then this may indicate lower demand in the marketplace.
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 |
Section 3: Nike Financial Ratios Analyzed from 2016 to 2020
For this section, I have chosen several different financial ratios to review for Nike from 2016 to 2020. 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 2016 at 2.8. In the next year, the company's current ratio would moderately increase to 2.9. However, in the next two years, the firm would substantially reduce its current ratio ending 2019 at 2.1. However, in 2020, the firm would substantially increase its current ratio ending the year at 2.48.
Nike Total Asset Turnover:
Nike had a total asset turnover in 2016 of 1.5. In the next year, the company's total asset turnover would fall to 1.48. Fortunately, in the next two years, the organization would better utilize their assets ending 2019 at 1.65. Unfortunately, probably due to the Covid 19, the organization's total asset turnover would fall to 1.19.
Nike Return on Assets:
Nike's return on assets ended 2016 at 17.5%. In the next year, the organization would moderately increase the return on assets ending the year at 18.2%. However, in 2018, the organization's return on assets would fall to 8.5%. However, in 2019, the organization's return assets would increase substantially, ending the year at 17%. Unfortunately, in 2020, the organization's return on assets would fall substantially to a five-year low of 8.1%.
Nike Debt ratio.
Nike's debt ratio ended in 2016, at 9.3%. In the next three years, the organization would moderately increase its debt ratio ending 2019 at 14.6%. Unfortunately, in 2020, the organization would substantially increase its debt ending 2020 at 30%.
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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