Nike Inc (NKE)
Cash conversion cycle
| May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 60.33 | 68.11 | 76.77 | 66.53 | 78.42 |
| Days of sales outstanding (DSO) | days | 31.38 | 29.32 | 36.45 | 36.46 | 26.84 |
| Number of days of payables | days | 22.87 | 23.06 | 30.61 | 27.53 | 23.93 |
| Cash conversion cycle | days | 68.83 | 74.37 | 82.60 | 75.47 | 81.34 |
May 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 60.33 + 31.38 – 22.87
= 68.83
The cash conversion cycle of Nike Inc has shown some fluctuations over the past five years. In the most recent fiscal year ending May 31, 2024, the cash conversion cycle decreased to 68.83 days from 74.37 days in the previous year. This suggests that Nike has improved its efficiency in managing its cash flow and working capital.
Comparing to the data from five years ago, the cash conversion cycle has shown a general downward trend, indicating that Nike has been more effective in managing its inventory, accounts receivable, and accounts payable over time. A lower cash conversion cycle means that Nike is able to convert its investments in inventory and receivables into cash more quickly, which is a positive sign of operational efficiency.
It is important to note that a lower cash conversion cycle can also indicate aggressive management of working capital, which may lead to liquidity challenges or strain relationships with suppliers or customers. However, in the context of Nike's performance, the decreasing trend in the cash conversion cycle indicates that the company has been successful in optimizing its cash flow management processes.
Peer comparison
May 31, 2024