Stock Analysis on Net

Nike Inc. (NYSE:NKE)

Analysis of Goodwill and Intangible Assets

Microsoft Excel

Goodwill and Intangible Asset Disclosure

Nike Inc., balance sheet: goodwill and intangible assets

US$ in millions

Microsoft Excel
May 31, 2023 May 31, 2022 May 31, 2021 May 31, 2020 May 31, 2019 May 31, 2018
Identifiable intangible assets, net 274 286 269 274 283 285
Goodwill 281 284 242 223 154 154
Identifiable intangible assets and goodwill 555 570 511 497 437 439

Based on: 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31), 10-K (reporting date: 2018-05-31).

Item Description The company
Identifiable intangible assets, net Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. Nike Inc. identifiable intangible assets, net increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.
Goodwill Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Nike Inc. goodwill increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.
Identifiable intangible assets and goodwill Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. Nike Inc. identifiable intangible assets and goodwill increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

Adjustments to Financial Statements: Removal of Goodwill

Nike Inc., adjustments to financial statements

US$ in millions

Microsoft Excel
May 31, 2023 May 31, 2022 May 31, 2021 May 31, 2020 May 31, 2019 May 31, 2018
Adjustment to Total Assets
Total assets (as reported) 37,531 40,321 37,740 31,342 23,717 22,536
Less: Goodwill 281 284 242 223 154 154
Total assets (adjusted) 37,250 40,037 37,498 31,119 23,563 22,382
Adjustment to Shareholders’ Equity
Shareholders’ equity (as reported) 14,004 15,281 12,767 8,055 9,040 9,812
Less: Goodwill 281 284 242 223 154 154
Shareholders’ equity (adjusted) 13,723 14,997 12,525 7,832 8,886 9,658

Based on: 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31), 10-K (reporting date: 2018-05-31).


Nike Inc., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios: Removal of Goodwill (Summary)

Nike Inc., adjusted financial ratios

Microsoft Excel
May 31, 2023 May 31, 2022 May 31, 2021 May 31, 2020 May 31, 2019 May 31, 2018
Total Asset Turnover
Reported total asset turnover 1.36 1.16 1.18 1.19 1.65 1.62
Adjusted total asset turnover 1.37 1.17 1.19 1.20 1.66 1.63
Financial Leverage
Reported financial leverage 2.68 2.64 2.96 3.89 2.62 2.30
Adjusted financial leverage 2.71 2.67 2.99 3.97 2.65 2.32
Return on Equity (ROE)
Reported ROE 36.20% 39.57% 44.86% 31.52% 44.57% 19.70%
Adjusted ROE 36.95% 40.31% 45.72% 32.42% 45.34% 20.01%
Return on Assets (ROA)
Reported ROA 13.51% 14.99% 15.17% 8.10% 16.99% 8.58%
Adjusted ROA 13.61% 15.10% 15.27% 8.16% 17.10% 8.64%

Based on: 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31), 10-K (reporting date: 2018-05-31).

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Nike Inc. adjusted total asset turnover ratio deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
Nike Inc. adjusted financial leverage ratio decreased from 2021 to 2022 but then slightly increased from 2022 to 2023.
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity. Nike Inc. adjusted ROE deteriorated from 2021 to 2022 and from 2022 to 2023.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Nike Inc. adjusted ROA deteriorated from 2021 to 2022 and from 2022 to 2023.

Nike Inc., Financial Ratios: Reported vs. Adjusted


Adjusted Total Asset Turnover

Microsoft Excel
May 31, 2023 May 31, 2022 May 31, 2021 May 31, 2020 May 31, 2019 May 31, 2018
As Reported
Selected Financial Data (US$ in millions)
Revenues 51,217 46,710 44,538 37,403 39,117 36,397
Total assets 37,531 40,321 37,740 31,342 23,717 22,536
Activity Ratio
Total asset turnover1 1.36 1.16 1.18 1.19 1.65 1.62
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Revenues 51,217 46,710 44,538 37,403 39,117 36,397
Adjusted total assets 37,250 40,037 37,498 31,119 23,563 22,382
Activity Ratio
Adjusted total asset turnover2 1.37 1.17 1.19 1.20 1.66 1.63

Based on: 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31), 10-K (reporting date: 2018-05-31).

2023 Calculations

1 Total asset turnover = Revenues ÷ Total assets
= 51,217 ÷ 37,531 = 1.36

2 Adjusted total asset turnover = Revenues ÷ Adjusted total assets
= 51,217 ÷ 37,250 = 1.37

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Nike Inc. adjusted total asset turnover ratio deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.

Adjusted Financial Leverage

Microsoft Excel
May 31, 2023 May 31, 2022 May 31, 2021 May 31, 2020 May 31, 2019 May 31, 2018
As Reported
Selected Financial Data (US$ in millions)
Total assets 37,531 40,321 37,740 31,342 23,717 22,536
Shareholders’ equity 14,004 15,281 12,767 8,055 9,040 9,812
Solvency Ratio
Financial leverage1 2.68 2.64 2.96 3.89 2.62 2.30
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets 37,250 40,037 37,498 31,119 23,563 22,382
Adjusted shareholders’ equity 13,723 14,997 12,525 7,832 8,886 9,658
Solvency Ratio
Adjusted financial leverage2 2.71 2.67 2.99 3.97 2.65 2.32

Based on: 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31), 10-K (reporting date: 2018-05-31).

2023 Calculations

1 Financial leverage = Total assets ÷ Shareholders’ equity
= 37,531 ÷ 14,004 = 2.68

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted shareholders’ equity
= 37,250 ÷ 13,723 = 2.71

Solvency ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
Nike Inc. adjusted financial leverage ratio decreased from 2021 to 2022 but then slightly increased from 2022 to 2023.

Adjusted Return on Equity (ROE)

Microsoft Excel
May 31, 2023 May 31, 2022 May 31, 2021 May 31, 2020 May 31, 2019 May 31, 2018
As Reported
Selected Financial Data (US$ in millions)
Net income 5,070 6,046 5,727 2,539 4,029 1,933
Shareholders’ equity 14,004 15,281 12,767 8,055 9,040 9,812
Profitability Ratio
ROE1 36.20% 39.57% 44.86% 31.52% 44.57% 19.70%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income 5,070 6,046 5,727 2,539 4,029 1,933
Adjusted shareholders’ equity 13,723 14,997 12,525 7,832 8,886 9,658
Profitability Ratio
Adjusted ROE2 36.95% 40.31% 45.72% 32.42% 45.34% 20.01%

Based on: 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31), 10-K (reporting date: 2018-05-31).

2023 Calculations

1 ROE = 100 × Net income ÷ Shareholders’ equity
= 100 × 5,070 ÷ 14,004 = 36.20%

2 Adjusted ROE = 100 × Net income ÷ Adjusted shareholders’ equity
= 100 × 5,070 ÷ 13,723 = 36.95%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity. Nike Inc. adjusted ROE deteriorated from 2021 to 2022 and from 2022 to 2023.

Adjusted Return on Assets (ROA)

Microsoft Excel
May 31, 2023 May 31, 2022 May 31, 2021 May 31, 2020 May 31, 2019 May 31, 2018
As Reported
Selected Financial Data (US$ in millions)
Net income 5,070 6,046 5,727 2,539 4,029 1,933
Total assets 37,531 40,321 37,740 31,342 23,717 22,536
Profitability Ratio
ROA1 13.51% 14.99% 15.17% 8.10% 16.99% 8.58%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income 5,070 6,046 5,727 2,539 4,029 1,933
Adjusted total assets 37,250 40,037 37,498 31,119 23,563 22,382
Profitability Ratio
Adjusted ROA2 13.61% 15.10% 15.27% 8.16% 17.10% 8.64%

Based on: 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31), 10-K (reporting date: 2018-05-31).

2023 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 5,070 ÷ 37,531 = 13.51%

2 Adjusted ROA = 100 × Net income ÷ Adjusted total assets
= 100 × 5,070 ÷ 37,250 = 13.61%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Nike Inc. adjusted ROA deteriorated from 2021 to 2022 and from 2022 to 2023.