Nike Inc (NKE)
Solvency ratios
| May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.21 | 0.24 | 0.22 | 0.25 | 0.30 |
| Debt-to-capital ratio | 0.35 | 0.39 | 0.37 | 0.42 | 0.54 |
| Debt-to-equity ratio | 0.55 | 0.64 | 0.58 | 0.74 | 1.17 |
| Financial leverage ratio | 2.64 | 2.68 | 2.64 | 2.96 | 3.89 |
Nike Inc's solvency ratios have shown a favorable trend over the past five years. The debt-to-assets ratio has decreased from 0.30 in 2020 to 0.21 in 2024, indicating that the company has been able to reduce its reliance on debt to finance its assets. This suggests a stronger financial position and lower risk of insolvency.
Similarly, the debt-to-capital ratio has declined from 0.54 in 2020 to 0.35 in 2024, reflecting a more conservative capital structure with a lower proportion of debt in relation to total capital. This indicates improved solvency and financial stability for Nike Inc.
The debt-to-equity ratio has also shown a consistent downward trend, decreasing from 1.17 in 2020 to 0.55 in 2024. This suggests that the company has been able to reduce its debt levels relative to equity, which is a positive sign of financial health and reduced financial risk.
Furthermore, the financial leverage ratio has improved from 3.89 in 2020 to 2.64 in 2024, highlighting a reduction in financial leverage and lower reliance on debt financing. This indicates that Nike Inc has been managing its debt levels effectively and has improved its financial flexibility.
In conclusion, Nike Inc's solvency ratios have improved over the past five years, reflecting a stronger financial position, better capital structure, and reduced financial risk. This indicates that the company is in a favorable position to meet its debt obligations and sustain its operations in the long term.
Coverage ratios
| May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | — | 20.68 | 32.56 | 26.48 | 35.00 |
The interest coverage ratio for Nike Inc has shown a downward trend over the past five years, starting at 35.00 in 2020 and decreasing to 26.48 in 2021, 32.56 in 2022, and further declining to 20.68 in 2023. No specific data is available for 2024. This decreasing trend indicates that the company's ability to cover its interest expense using its operating income has weakened over time. While a higher interest coverage ratio is generally preferred by investors and creditors as it signifies a lower default risk, Nike Inc's declining ratios suggest the need for close monitoring of its financial leverage and interest burden to ensure financial stability and sustainability in the long term.