Nike Inc (NKE)
Solvency ratios
| May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 2.77 | 2.64 | 2.68 | 2.64 | 2.96 |
The analysis of Nike Inc.'s solvency ratios based on the provided data reveals a consistent and strong solvency profile over the period from May 31, 2021, to May 31, 2025.
The debt-to-assets ratio remains at zero throughout all years, indicating that the company does not possess any long-term or short-term debt relative to its total assets. This suggests an entirely equity-financed capital structure, highlighting a conservative approach to leverage and a low financial risk profile.
Similarly, the debt-to-capital ratio is consistently zero, further reinforcing that Nike is not utilizing debt to finance its operations or growth initiatives during the specified period. The absence of debt implies minimal financial obligations, reducing the company's exposure to interest rate fluctuations and refinancing risks.
The debt-to-equity ratio, which measures the proportion of debt relative to shareholders' equity, also remains at zero across all years. This further confirms that Nike's capital structure is entirely equity-based, implying that the company relies solely on shareholders’ funds for its financing needs.
The financial leverage ratio, which indicates the degree of financial leverage being used, shows values ranging from 2.64 to 2.77 over the period. This ratio suggests that Nike employs internal or operational leverage rather than financial leverage from debt. A ratio above 2 indicates that the company's assets are financed more through equity than through debt, consistent with the other ratios showing zero debt.
Overall, the data indicates that Nike Inc. maintains a debt-free capital structure during the analyzed period. The company’s high financial leverage ratio, in the context of negligible debt, suggests that its operational structure allows for significant asset utilization without reliance on borrowed funds. This approach results in a low risk of insolvency and financial distress, positioning Nike as a financially conservative and solvent enterprise over the evaluated years.
Coverage ratios
| May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | |
|---|---|---|---|---|---|
| Interest coverage | 0.00 | — | 20.68 | 22.86 | 24.00 |
The analysis of Nike Inc.'s interest coverage ratios over the period from May 31, 2021, to May 31, 2025, reveals a trend of declining capability to cover interest expenses with earnings before interest and taxes (EBIT).
As of May 31, 2021, the interest coverage ratio stood at 24.00, indicating a strong cushion of earnings relative to interest obligations. This ratio decreased slightly in the following year to 22.86 by May 31, 2022, suggesting marginally reduced but still robust ability to meet interest expenses.
The trend continued into 2023, with the ratio further declining to 20.68, reflecting a gradual deterioration in Nike’s EBIT relative to its interest obligations. Despite this decline, the ratio remains well above common safety thresholds, which often consider ratios below 3 or 4 as potentially concerning. This indicates that Nike's earnings have historically been sufficient to comfortably cover interest expenses during this period.
Projected data for subsequent years show a significant deterioration in interest coverage. For May 31, 2024, the data is unavailable ("—"), precluding further analysis for that year. For May 31, 2025, the ratio is indicated as 0.00, representing an expected removal or significant impairment of interest coverage capacity, which could be due to a major reduction in EBIT, an increase in interest expenses, or a combination of both.
Overall, the observed trend reflects a gradual decline in Nike's ability to generate sufficient earnings to cover interest costs, culminating in a projected absence of coverage in 2025. This trajectory may warrant closer scrutiny of the company's earnings stability, debt levels, and overall financial health moving forward.