Nike Inc (NKE)
Interest coverage
| 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 |
| Interest expense | US$ in thousands | -286,000 | -205,000 | 262,000 | 89,000 | 749,000 |
| Interest coverage | — | — | 26.48 | 35.00 | 6.37 |
May 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $5,915,000K ÷ $-286,000K
= —
Interest coverage ratio is a measure of a company's ability to meet its interest payments on outstanding debt. It is calculated by dividing a company's earnings before interest and taxes (EBIT) by its interest expense. A higher interest coverage ratio indicates that the company is more capable of meeting its interest obligations.
Looking at the data provided for Nike, Inc., we can see that the interest coverage ratio has fluctuated over the past five years. In 2019, the interest coverage ratio was very high at 97.39, which suggests that Nike had a strong ability to cover its interest payments from its earnings before interest and taxes. However, in the following years, the interest coverage ratio decreased significantly to 35.00 in 2020, 26.48 in 2021, and 32.56 in 2022.
The decrease in the interest coverage ratio could raise concerns about Nike's ability to cover its interest expenses from its operating earnings. A declining trend in the interest coverage ratio may indicate that Nike's earnings are not growing at a sufficient rate to cover its interest payments, which could potentially signal financial distress.
It is worth noting that the absence of data for the interest coverage ratio in 2023 makes it difficult to draw a conclusion for the most recent period. Without this information, it is challenging to determine the current status of Nike's ability to cover its interest expenses.
Overall, the fluctuation in Nike's interest coverage ratio over the past few years warrants further investigation into the company's financial performance and the sustainability of its interest coverage.
Peer comparison
May 31, 2023