Nike Inc (NKE)
Profitability ratios
Return on sales
| May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | May 31, 2019 | |
|---|---|---|---|---|---|
| Gross profit margin | 43.34% | 45.96% | 44.68% | 43.45% | 44.94% |
| Operating profit margin | 11.50% | 14.28% | 15.53% | 8.33% | 12.27% |
| Pretax margin | 12.06% | 14.23% | 14.91% | 7.72% | 12.35% |
| Net profit margin | 9.86% | 12.94% | 12.82% | 6.79% | 10.36% |
The profitability ratios of Nike, Inc. indicate a mixed performance over the past five years. The gross profit margin has experienced a slight decline, from 45.98% in 2022 to 43.52% in 2023, suggesting a decrease in the percentage of revenue remaining after deducting the cost of goods sold. This may indicate increased production or material costs.
The operating profit margin also showed a downward trend, dropping from 14.29% in 2022 to 11.55% in 2023. This decrease suggests that the company's operating expenses have grown in relation to its revenue, impacting the profitability of its core business activities.
Similarly, the pretax margin decreased from 14.24% in 2022 to 12.11% in 2023, indicating that the company's profitability before considering taxes has declined. This may signal challenges in effectively managing non-operating expenses and other income-related factors.
The net profit margin, which represents the company's bottom-line profitability, decreased from 12.94% in 2022 to 9.90% in 2023. This notable decline suggests that after accounting for all expenses, including taxes, the company retained a lower percentage of its revenue as net income.
Overall, the declining trends in these profitability ratios may indicate challenges in managing costs and expenses relative to revenue, and it may be important for Nike, Inc. to assess and address these factors to improve its overall profitability in the future.
Return on investment
| May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | May 31, 2019 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 15.76% | 16.55% | 18.38% | 9.94% | 20.12% |
| Return on assets (ROA) | 13.51% | 14.99% | 15.17% | 8.10% | 16.99% |
| Return on total capital | 25.79% | 27.58% | 31.28% | 17.84% | 38.16% |
| Return on equity (ROE) | 36.20% | 39.57% | 44.86% | 31.52% | 44.57% |
Nike, Inc.'s profitability ratios show a mixed trend over the past five years. Operating return on assets (Operating ROA) decreased from 20.12% in 2019 to 15.76% in 2023, indicating a decline in the company's ability to generate operating profits from its assets. Similarly, return on assets (ROA) decreased from 16.99% in 2019 to 13.51% in 2023, reflecting a reduction in the company's overall profitability relative to its total assets.
In contrast, return on total capital increased from 38.12% in 2019 to 25.79% in 2023, suggesting a positive trend in the company's ability to generate returns from its total capital. Additionally, return on equity (ROE) declined from 44.57% in 2019 to 36.20% in 2023, indicating a decrease in the company's ability to generate profits for its shareholders relative to their equity investment.
Overall, the profitability ratios for Nike, Inc. suggest that while the company's ability to generate returns from its total capital has improved, its overall profitability in relation to its assets and equity has shown some decline in recent years. These trends may indicate shifts in the company's operating efficiency and financial leverage, which would warrant further investigation and analysis.