Profitability Analysis

Difficulty level: Basic

Profitability ratios measure the company's ability to generate profitable sales from its resources (assets).


Ratios (Summary)

Nike Inc., profitability ratios

 
May 31, 2014 May 31, 2013 May 31, 2012 May 31, 2011 May 31, 2010 May 31, 2009
Return on Sales
Gross profit margin 44.77% 43.59% 43.40% 45.58% 46.28% 44.87%
Operating profit margin 13.24% 12.86% 12.60% 13.49% 13.01% 9.69%
Net profit margin 9.69% 9.82% 9.21% 10.22% 10.03% 7.75%
Return on Investment
Return on equity (ROE) 24.88% 22.28% 21.41% 21.67% 19.55% 17.11%
Return on assets (ROA) 14.48% 14.13% 14.37% 14.22% 13.23% 11.22%

Source: Based on data from Nike Inc. Annual Reports

Ratio Description The company
Gross profit margin Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures. Nike Inc.'s gross profit margin improved from 2012 to 2013 and from 2013 to 2014.
Operating profit margin A profitability ratio calculated as operating income divided by revenue. Nike Inc.'s operating profit margin improved from 2012 to 2013 and from 2013 to 2014.
Net profit margin An indicator of profitability, calculated as net income divided by revenue. Nike Inc.'s net profit margin improved from 2012 to 2013 but then slightly deteriorated from 2013 to 2014.
ROE A profitability ratio calculated as net income divided by shareholders' equity. Nike Inc.'s ROE improved from 2012 to 2013 and from 2013 to 2014.
ROA A profitability ratio calculated as net income divided by total assets. Nike Inc.'s ROA deteriorated from 2012 to 2013 but then improved from 2013 to 2014 exceeding 2012 level.

ADVERTISEMENT

Top


Gross Profit Margin

Nike Inc., gross profit margin calculation

 
May 31, 2014 May 31, 2013 May 31, 2012 May 31, 2011 May 31, 2010 May 31, 2009
Selected Financial Data (USD $ in millions)
Gross profit 12,446  11,034  10,471  9,508  8,800  8,604 
Revenues 27,799  25,313  24,128  20,862  19,014  19,176 
Ratio
Gross profit margin1 44.77% 43.59% 43.40% 45.58% 46.28% 44.87%

Source: Based on data from Nike Inc. Annual Reports

2014 Calculations

1 Gross profit margin = 100 × Gross profit ÷ Revenues
= 100 × 12,446 ÷ 27,799 = 44.77%

Ratio Description The company
Gross profit margin Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures. Nike Inc.'s gross profit margin improved from 2012 to 2013 and from 2013 to 2014.

ADVERTISEMENT

Top


Operating Profit Margin

Nike Inc., operating profit margin calculation, comparison to benchmarks

 
May 31, 2014 May 31, 2013 May 31, 2012 May 31, 2011 May 31, 2010 May 31, 2009
Selected Financial Data (USD $ in millions)
Operating income 3,680  3,254  3,040  2,815  2,474  1,858 
Revenues 27,799  25,313  24,128  20,862  19,014  19,176 
Ratio
Operating profit margin1 13.24% 12.86% 12.60% 13.49% 13.01% 9.69%
Benchmarks
Operating Profit Margin, Industry
Consumer Goods –% 9.81% 5.15% 9.40% 8.90% 7.80%

Source: Based on data from Nike Inc. Annual Reports

2014 Calculations

1 Operating profit margin = 100 × Operating income ÷ Revenues
= 100 × 3,680 ÷ 27,799 = 13.24%

Ratio Description The company
Operating profit margin A profitability ratio calculated as operating income divided by revenue. Nike Inc.'s operating profit margin improved from 2012 to 2013 and from 2013 to 2014.

ADVERTISEMENT

Top


Net Profit Margin

Nike Inc., net profit margin calculation, comparison to benchmarks

 
May 31, 2014 May 31, 2013 May 31, 2012 May 31, 2011 May 31, 2010 May 31, 2009
Selected Financial Data (USD $ in millions)
Net income 2,693  2,485  2,223  2,133  1,907  1,487 
Revenues 27,799  25,313  24,128  20,862  19,014  19,176 
Ratio
Net profit margin1 9.69% 9.82% 9.21% 10.22% 10.03% 7.75%
Benchmarks
Net Profit Margin, Industry
Consumer Goods –% 7.61% 6.77% 8.79% 7.65% 6.07%

Source: Based on data from Nike Inc. Annual Reports

2014 Calculations

1 Net profit margin = 100 × Net income ÷ Revenues
= 100 × 2,693 ÷ 27,799 = 9.69%

Ratio Description The company
Net profit margin An indicator of profitability, calculated as net income divided by revenue. Nike Inc.'s net profit margin improved from 2012 to 2013 but then slightly deteriorated from 2013 to 2014.

ADVERTISEMENT

Top


Return on Equity (ROE)

Nike Inc., ROE calculation, comparison to benchmarks

 
May 31, 2014 May 31, 2013 May 31, 2012 May 31, 2011 May 31, 2010 May 31, 2009
Selected Financial Data (USD $ in millions)
Net income 2,693  2,485  2,223  2,133  1,907  1,487 
Total shareholders' equity 10,824  11,156  10,381  9,843  9,754  8,693 
Ratio
ROE1 24.88% 22.28% 21.41% 21.67% 19.55% 17.11%
Benchmarks
ROE, Industry
Consumer Goods –% 18.24% 16.51% 21.68% 18.72% 15.25%

Source: Based on data from Nike Inc. Annual Reports

2014 Calculations

1 ROE = 100 × Net income ÷ Total shareholders' equity
= 100 × 2,693 ÷ 10,824 = 24.88%

Ratio Description The company
ROE A profitability ratio calculated as net income divided by shareholders' equity. Nike Inc.'s ROE improved from 2012 to 2013 and from 2013 to 2014.

ADVERTISEMENT

Top


Return on Assets (ROA)

Nike Inc., ROA calculation, comparison to benchmarks

 
May 31, 2014 May 31, 2013 May 31, 2012 May 31, 2011 May 31, 2010 May 31, 2009
Selected Financial Data (USD $ in millions)
Net income 2,693  2,485  2,223  2,133  1,907  1,487 
Total assets 18,594  17,584  15,465  14,998  14,419  13,250 
Ratio
ROA1 14.48% 14.13% 14.37% 14.22% 13.23% 11.22%
Benchmarks
ROA, Industry
Consumer Goods –% 5.63% 4.99% 6.75% 5.66% 4.46%

Source: Based on data from Nike Inc. Annual Reports

2014 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 2,693 ÷ 18,594 = 14.48%

Ratio Description The company
ROA A profitability ratio calculated as net income divided by total assets. Nike Inc.'s ROA deteriorated from 2012 to 2013 but then improved from 2013 to 2014 exceeding 2012 level.

ADVERTISEMENT

Top