Nike Inc (NKE)
Liquidity ratios
| May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | |
|---|---|---|---|---|---|
| Current ratio | 2.21 | 2.40 | 2.72 | 2.63 | 2.72 |
| Quick ratio | 1.31 | 1.51 | 1.60 | 1.65 | 1.85 |
| Cash ratio | 0.87 | 1.09 | 1.15 | 1.21 | 1.39 |
Nike Inc.'s liquidity ratios over the specified period indicate a consistent trend of stable but gradually declining liquidity positions.
The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, remained relatively stable from May 31, 2021, to May 31, 2023, oscillating around 2.7 and 2.63, respectively. However, a decline is observable in subsequent years, with the ratio decreasing to 2.40 in 2024 and further to 2.21 in 2025. Despite the downward trend, the current ratio remains comfortably above the generally accepted minimum of 2.0, suggesting that Nike continues to maintain an adequate buffer to meet short-term obligations.
The quick ratio, which excludes inventory from current assets to assess liquidity in more immediate terms, followed a similar pattern. It slightly declined from 1.85 in 2021 to 1.65 in 2022, and further to 1.60 in 2023. Subsequently, the ratio showed a continued decrease to 1.51 in 2024 and to 1.31 in 2025. This declining trend indicates a gradual reduction in the company's liquid assets that are readily available to cover short-term liabilities without relying on inventory sales.
The cash ratio, representing the most conservative measure of liquidity and focusing solely on cash and cash equivalents, also exhibited a declining trend. It moved from 1.39 in 2021 to 1.21 in 2022, then to 1.15 in 2023. In the following years, the cash ratio decreased to 1.09 in 2024 and further to 0.87 in 2025, approaching levels closer to one and below. This suggests a diminishing proportion of cash and immediate liquid assets available relative to current liabilities over time.
Overall, Nike Inc.'s liquidity ratios demonstrate a consistent decline across all three measures over the analyzed period. While the ratios remain within acceptable ranges, indicating the company maintains a generally adequate liquidity position, the trend highlights increasing reliance on other current assets or potential liquidity constraints. Continuous monitoring is warranted to ensure the liquidity profile remains sufficient to meet short-term obligations in changing market conditions.
See also:
Additional liquidity measure
| May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 92.37 | 91.30 | 100.00 | 109.70 | 96.25 |
The cash conversion cycle (CCC) of Nike Inc. over the period from May 2021 to May 2025 exhibits notable fluctuations that reflect the company's operational efficiency and liquidity management strategies during this timeframe.
In May 2021, Nike's CCC was approximately 96.25 days, indicating the average duration it takes for the company to convert its investments in inventory and other resources into cash flows from sales. This relatively moderate cycle suggests a balanced approach to inventory management and receivable collections in the post-pandemic recovery phase.
By May 2022, the CCC increased significantly to around 109.70 days, representing an elongation of approximately 13.45 days. This increase may be attributed to extended inventory holding periods or delayed receivables, potentially due to supply chain disruptions or shifts in consumer demand during that period.
In May 2023, the CCC slightly declined to 100.00 days, indicating a partial recovery and improvement in operational efficiencies. This reduction may reflect efforts to streamline inventory turnover or faster collection of receivables.
By May 2024, the CCC further decreased to approximately 91.30 days, suggesting a continued trend toward efficiency, likely driven by improved supply chain logistics, inventory management, and receivables collection processes. This reduction contributed to shorter operating cycles and enhanced liquidity.
However, by May 2025, the CCC experienced a marginal increase to about 92.37 days. While still below the peak observed in 2022, this slight uptick could be indicative of ongoing adjustments in inventory levels or receivables collection policies in response to market dynamics.
Overall, the trend in Nike Inc.'s cash conversion cycle over these years reflects dynamic management of operational components, with periods of expansion and contraction possibly tied to external factors such as supply chain conditions, demand fluctuations, and strategic initiatives aimed at optimizing working capital. The general downward trajectory from 2022 onward suggests a move towards greater operational efficiency and improved liquidity management in recent years.