Nike Inc (NKE)

Short-term

Turnover ratios

The analysis of Nike Inc.'s activity ratios over the specified periods reveals several key trends and insights into the company's operational efficiency.

Inventory Turnover:
The inventory turnover ratio shows a general upward trend from May 2020 to August 2024, increasing from 2.87 to a peak of 3.79 before decreasing slightly to 3.34 in August 2024, and then rebounding to 3.56 by February 2025. This indicates an overall improvement in inventory management and sales efficiency, with Nike increasingly turning over inventory more rapidly, particularly between November 2023 and February 2025. The fluctuations suggest periods of inventory optimization, with some temporary slowdown possibly due to seasonal or strategic inventory holdings.

Receivables Turnover:
Nike’s receivables turnover ratio exhibits notable fluctuations, peaking at 12.36 in November 2021 and remaining relatively high through subsequent periods, including 11.60 in May 2024 and 10.65 in February 2025. Higher ratios imply more effective collection of receivables and shorter collection periods, enhancing liquidity. The earlier period (May 2020) shows a lower ratio at 13.61, but this appears inconsistent, possibly due to different calculation methods or data anomalies. Overall, the trend indicates improved receivables management over time.

Payables Turnover:
The payables turnover ratio fluctuates over the period, with an initial value of 9.41 in May 2020, reaching a high of 12.28 in February 2024, reflecting Nike’s tendency to settle its payables more rapidly at times. The ratio tends to oscillate, but the upward trend toward early 2024 suggests increased activity in accounts payable, potentially indicating shorter payment periods or renegotiated credit terms. Post-February 2024, the ratio declines slightly to 8.65 in February 2025, implying a modest extension in payment periods or changes in supplier payment strategies.

Working Capital Turnover:
This ratio shows a steady upward trend from 3.05 in May 2020 to 3.57 in February 2025. The increasing ratio indicates that Nike is utilizing its working capital more efficiently to generate sales. The gradual improvements reflect better management of short-term assets and liabilities, possibly driven by improved cash flows, receivables collection, and inventory management.

Summary:
Overall, Nike Inc.'s activity ratios suggest continual enhancements in operational efficiency. The inventory turnover improvement indicates more effective inventory management. The receivables turnover's upward trend reflects better receivables collection practices. The fluctuations in payables turnover indicate strategic adjustments in payables management, possibly balancing supplier relationships and cash flow optimizations. The consistent rise in working capital turnover underscores more efficient utilization of short-term assets to support sales. Collectively, these ratios point towards a strategic focus on operational efficiency, liquidity management, and optimized working capital utilization over the analyzed period.

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Average number of days

The analysis of Nike Inc.'s activity ratios over the provided period reveals several key points regarding inventory management, receivables collection, and payables practices.

Days of Inventory on Hand (DOH):
From May 2020 through February 2025, Nike's DOH has demonstrated a general decreasing trend, indicative of improved inventory turnover. The figure decreased from approximately 127.07 days in May 2020 to around 102.44 days in February 2025. Notable fluctuations include a peak of approximately 136.95 days in August 2022, followed by a consistent decline towards the most recent period. This trend suggests that Nike has been effectively reducing the duration inventory remains unsold, which could lead to lowered holding costs and increased efficiency in inventory utilization.

Days of Sales Outstanding (DSO):
The DSO figures have shown moderate fluctuations but generally maintained a relatively stable pattern. Starting from roughly 26.83 days in May 2020, DSO increased to a peak of approximately 40.41 days in November 2022, before decreasing again to around 34.28 days in February 2025. The overall trend indicates a slight loosening in receivables collection efficiency during the interim period but a return toward more efficient management in recent periods. Consistently, DSO remained below 45 days, reflecting relatively prompt collection practices aligned with industry standards.

Number of Days of Payables:
Nike's payable days exhibited variability over the period. Early on, values hovered around 38.77 days in May 2020, with fluctuations observed later — reaching peaks of approximately 48.58 days in May 2022 and even exceeding 44 days in August 2024. Conversely, the shortest payable periods occurred around February 2024 (~29.73 days). The trend suggests strategic management of supplier payments, sometimes extending payables to optimize cash flow while balancing supplier relationships. The recent decrease in payable days to around 34 days indicates a move toward more timely payments.

Overall Assessment:
The data presents Nike's ongoing efforts toward operational efficiency. The decline in Days of Inventory on Hand reflects improved inventory turnover, likely decreasing storage costs and reducing potential obsolescence risk. The relatively stable DSO suggests the company maintains effective receivables management, ensuring steady cash inflow. Variability in days of payables indicates flexibility in managing payment terms to optimize working capital, with recent periods tending toward shorter payables, possibly reflecting a strategic shift to strengthen supplier relationships or mitigate supply chain risks.

In summary, Nike Inc.'s activity ratios depict a trend toward enhanced operational efficiency, characterized by faster inventory turnover, consistent receivables collections, and prudent management of payables, all of which support a healthy working capital position.

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See also:

Nike Inc Short-term (Operating) Activity Ratios (Quarterly Data)

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Long-term

The analysis of Nike Inc.'s long-term activity ratios reveals the following trends based on the provided data.

Fixed Asset Turnover Ratio:
The fixed asset turnover ratio exhibits fluctuations over the periods observed. From May 31, 2020, through February 28, 2021, the ratio remains relatively stable, averaging around 7.69 to 7.77, indicating consistent utilization of fixed assets in generating sales. However, a noticeable decline occurs starting May 31, 2021, where the ratio drops to approximately 5.56 and remains within the 5.81 to 6.41 range through the end of 2022, suggesting a decrease in asset efficiency or an increase in fixed assets relative to sales. A significant spike is observed on February 28, 2023, when the ratio sharply increases to 10.25, indicating a period of heightened fixed asset utilization or possibly asset disposals that improved efficiency temporarily. Subsequently, the ratio stabilizes around 6.37 to 6.40 from May 31, 2023, onwards, denoting a return to a consistent level of fixed asset utilization.

Total Asset Turnover Ratio:
The total asset turnover ratio demonstrates a steady upward trend over the period. Starting at 1.19 on May 31, 2020, it dips slightly to 1.06 by February 28, 2021, but then exhibits consistent growth, reaching 1.36 by May 31, 2023. After this peak, a slight decline occurs but remains relatively stable, maintaining values around 1.29 to 1.40 through the remaining periods up to November 30, 2023. This upward trend suggests an improvement in the overall efficiency with which Nike utilizes its total assets to generate sales over time.

Summary:
Overall, Nike's long-term activity ratios indicate periods of fluctuating efficiency in utilizing fixed assets, with a notable peak in fixed asset turnover during February 2023, possibly reflecting strategic asset management or operational efficiencies. The consistent increase in total asset turnover ratio signifies ongoing improvements in asset utilization efficiency across the company’s broader asset base. The stabilization of these ratios in recent periods suggests a mature operational phase with sustainable asset management strategies.

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See also:

Nike Inc Long-term (Investment) Activity Ratios (Quarterly Data)