Nike Inc (NKE)
Return on total capital
| May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | May 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 5,915,000 | 6,675,000 | 6,937,000 | 3,115,000 | 4,772,000 |
| Long-term debt | US$ in thousands | 8,927,000 | 8,920,000 | 9,413,000 | 9,406,000 | 3,464,000 |
| Total stockholders’ equity | US$ in thousands | 14,004,000 | 15,281,000 | 12,767,000 | 8,055,000 | 9,040,000 |
| Return on total capital | 25.79% | 27.58% | 31.28% | 17.84% | 38.16% |
May 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $5,915,000K ÷ ($8,927,000K + $14,004,000K)
= 25.79%
Nike, Inc.'s return on total capital (ROTC) has fluctuated over the past five years, reflecting the company's ability to generate returns from its overall capital employed in its operations. The ROTC decreased from 38.12% in 2019 to 17.59% in 2020, indicating a significant decline in the company's efficiency in generating profits from its capital investments. However, there was a notable recovery in 2021 with the ROTC increasing to 31.27%. This rebound demonstrated Nike's improved performance in utilizing its total capital to generate returns.
In 2022, the ROTC decreased slightly to 27.01%, signaling a moderate decline in the company's capital efficiency compared to the previous year. Finally, in the most recent year, the ROTC further decreased to 25.79%. While still indicating a strong return on total capital, this continued decrease suggests potential challenges in maintaining historical levels of profitability relative to the amount of total capital employed.
Overall, Nike, Inc.'s ROTC trend reflects fluctuations in the company's operational efficiency and effectiveness in generating returns from its total capital. Further analysis of the underlying factors driving these changes, such as changes in profitability, assets, and debt structure, would be necessary to gain a deeper understanding of Nike's performance and the potential impact on its financial health.
Peer comparison
May 31, 2023