Nike Inc (NKE)
Debt-to-capital ratio
| May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | ||
|---|---|---|---|---|---|---|
| Long-term debt | US$ in thousands | 7,903,000 | 8,927,000 | 8,920,000 | 9,413,000 | 9,406,000 |
| Total stockholders’ equity | US$ in thousands | 14,430,000 | 14,004,000 | 15,281,000 | 12,767,000 | 8,055,000 |
| Debt-to-capital ratio | 0.35 | 0.39 | 0.37 | 0.42 | 0.54 |
May 31, 2024 calculation
Debt-to-capital ratio = Long-term debt ÷ (Long-term debt + Total stockholders’ equity)
= $7,903,000K ÷ ($7,903,000K + $14,430,000K)
= 0.35
The analysis of Nike Inc's debt-to-capital ratio over the past five years reveals a generally decreasing trend, indicating an improvement in the company's financial leverage. The ratio stood at 0.54 in May 31, 2020, suggesting that 54% of Nike's capital was financed by debt that year. However, this ratio has steadily declined to 0.35 by May 31, 2024, indicating a more conservative capital structure with only 35% of the capital being debt-funded.
This downward trend in the debt-to-capital ratio reflects Nike's efforts to reduce its reliance on debt financing and strengthen its financial position. A lower debt-to-capital ratio is typically viewed positively by investors and creditors as it signifies a lower financial risk and greater financial stability for the company.
Overall, the decreasing trend in Nike Inc's debt-to-capital ratio over the past five years suggests a prudent approach to managing capital structure and debt levels, which may contribute to enhancing the company's long-term financial health and sustainability.
Peer comparison
May 31, 2024