Nike Inc (NKE)

The analysis of Nike Inc.'s liquidity ratios over the specified period reveals trends indicative of prudent liquidity management and a relatively stable liquidity position.

The current ratio, which measures the company's ability to meet its short-term obligations using its current assets, has remained consistently above 2.0 throughout the period, with fluctuations between approximately 2.19 and 3.19. The peak of 3.19 in August 2021 suggests a strong liquidity cushion at that time. Although there has been a gradual decline from the higher levels observed in late 2021 and early 2022, the current ratio has remained stable around 2.36 to 2.87 in the most recent data points, including November 2023. This indicates that Nike maintains sufficient current assets relative to current liabilities, providing a comfortable margin for operational flexibility.

The quick ratio, which excludes inventory from current assets and focuses on the most liquid assets, has followed a similar stability pattern. During the period, it has fluctuated within approximately 1.31 to 2.18, with its highest point observed in August 2021 at 2.18. Post-2021, the quick ratio experienced a gradual decline, reaching around 1.33 by May 2025. Despite this decline, the quick ratio has generally remained above 1.3, signifying that Nike retains enough liquid assets other than inventory to cover immediate liabilities, which is generally viewed as a sign of good short-term financial health.

The cash ratio, which measures the company's ability to settle short-term liabilities with cash and cash equivalents, has shown more pronounced fluctuations. It ranged from a high of 1.71 in November 2021 to a low of approximately 0.87 in late 2024 and early 2025. Although the cash ratio has experienced declines, it has generally hovered around 0.87 to 1.17 near the most recent periods, indicating that Nike's cash and cash equivalents are sufficient to cover a significant portion of near-term obligations, but not all.

Overall, Nike’s liquidity ratios suggest a conservative and stable liquidity position throughout the period analyzed. The company has maintained comfortable margins in its current and quick ratios, reflecting prudent management of short-term assets and liabilities. While the declining trend in the cash ratio warrants monitoring, it does not currently suggest imminent liquidity concerns given the support from current and quick ratios.

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See also:

Nike Inc Liquidity Ratios (Quarterly Data)

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Additional liquidity measure

The analysis of Nike Inc's cash conversion cycle (CCC) over the provided period reveals notable fluctuations with a general downward trend from a high of approximately 127.82 days on November 30, 2022, to around 91.30 days on May 31, 2024.

Initially, the CCC fluctuated within a range of roughly 96 days to over 127 days between August 2020 and August 2023, indicating periods of extended cash cycle duration. The peak was observed at approximately 127.82 days in late 2022, which suggests a relatively longer period to convert investments and inventory into cash during this time. Conversely, the cycle periods in early 2024 show a significant reduction, with the shortest recorded at 91.30 days on May 31, 2024, signaling improved efficiency in managing the firm's working capital.

This downward trajectory indicates an improved ability to generate cash flows sooner, potentially driven by better inventory management, shorter average collection periods, or more efficient payable practices. The slight increases observed later in 2024, around 103 days, suggest some volatility but maintain a generally shorter cycle compared to the earlier peaks.

Overall, the trend indicates Nike’s ongoing efforts to optimize its working capital management, resulting in a more efficient cash conversion process. This efficiency may positively influence liquidity and operational flexibility, enhancing Nike’s capacity to fund growth initiatives and sustain financial stability.