Short-term (Operating) Activity Analysis


Ratios (Summary)

Nike Inc., short-term (operating) activity ratios

 
May 31, 2014 May 31, 2013 May 31, 2012 May 31, 2011 May 31, 2010 May 31, 2009
Turnover Ratios
Inventory turnover 3.89 4.16 4.08 4.18 5.00 4.49
Receivables turnover 8.10 8.12 7.36 6.65 7.18 6.65
Payables turnover 7.95 8.67 8.60 7.73 8.14 10.24
Working capital turnover 3.21 2.61 3.15 2.84 2.50 2.97
Average No. of Days
Average inventory processing period 94 88 90 87 73 81
Add: Average receivable collection period 45 45 50 55 51 55
Operating cycle 139 133 140 142 124 136
Less: Average payables payment period 46 42 42 47 45 36
Cash conversion cycle 93 91 98 95 79 100

Source: Based on data from Nike Inc. Annual Reports

Ratio Description The company
Inventory turnover An activity ratio calculated as cost of goods sold divided by inventory. Nike Inc.'s inventory turnover improved from 2012 to 2013 but then deteriorated significantly from 2013 to 2014.
Receivables turnover An activity ratio equal to revenue divided by receivables. Nike Inc.'s receivables turnover improved from 2012 to 2013 but then slightly deteriorated from 2013 to 2014.
Payables turnover An activity ratio calculated as cost of goods sold divided by payables. Nike Inc.'s payables turnover increased from 2012 to 2013 but then declined significantly from 2013 to 2014.
Working capital turnover An activity ratio calculated as revenue divided by working capital. Nike Inc.'s working capital turnover deteriorated from 2012 to 2013 but then improved from 2013 to 2014 exceeding 2012 level.
Average inventory processing period An activity ratio equal to the number of days in the period divided by inventory turnover over the period. Nike Inc.'s average inventory processing period improved from 2012 to 2013 but then deteriorated significantly from 2013 to 2014.
Average receivable collection period An activity ratio equal to the number of days in the period divided by receivables turnoverd.
Operating cycle Equal to average inventory processing period plus average receivables collection period. Nike Inc.'s operating cycle improved from 2012 to 2013 but then slightly deteriorated from 2013 to 2014 not reaching 2012 level.
Average payables payment period An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period.
Cash conversion cycle A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. Nike Inc.'s cash conversion cycle improved from 2012 to 2013 but then slightly deteriorated from 2013 to 2014.

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Inventory Turnover

Nike Inc., inventory turnover 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)
Cost of sales 15,353  14,279  13,657  11,354  10,214  10,572 
Inventories 3,947  3,434  3,350  2,715  2,041  2,357 
Ratio
Inventory turnover1 3.89 4.16 4.08 4.18 5.00 4.49
Benchmarks
Inventory Turnover, Industry
Consumer Goods 7.61 7.46 8.10 7.81 7.30

Source: Based on data from Nike Inc. Annual Reports

2014 Calculations

1 Inventory turnover = Cost of sales ÷ Inventories
= 15,353 ÷ 3,947 = 3.89

Ratio Description The company
Inventory turnover An activity ratio calculated as cost of goods sold divided by inventory. Nike Inc.'s inventory turnover improved from 2012 to 2013 but then deteriorated significantly from 2013 to 2014.

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Receivables Turnover

Nike Inc., receivables turnover 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)
Revenues 27,799  25,313  24,128  20,862  19,014  19,176 
Accounts receivable, net 3,434  3,117  3,280  3,138  2,650  2,884 
Ratio
Receivables turnover1 8.10 8.12 7.36 6.65 7.18 6.65
Benchmarks
Receivables Turnover, Industry
Consumer Goods 13.25 11.91 13.58 12.51 13.86

Source: Based on data from Nike Inc. Annual Reports

2014 Calculations

1 Receivables turnover = Revenues ÷ Accounts receivable, net
= 27,799 ÷ 3,434 = 8.10

Ratio Description The company
Receivables turnover An activity ratio equal to revenue divided by receivables. Nike Inc.'s receivables turnover improved from 2012 to 2013 but then slightly deteriorated from 2013 to 2014.

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Payables Turnover

Nike Inc., payables turnover 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)
Cost of sales 15,353  14,279  13,657  11,354  10,214  10,572 
Accounts payable 1,930  1,646  1,588  1,469  1,255  1,032 
Ratio
Payables turnover1 7.95 8.67 8.60 7.73 8.14 10.24
Benchmarks
Payables Turnover, Industry
Consumer Goods 6.75 6.31 7.28 6.79 9.25

Source: Based on data from Nike Inc. Annual Reports

2014 Calculations

1 Payables turnover = Cost of sales ÷ Accounts payable
= 15,353 ÷ 1,930 = 7.95

Ratio Description The company
Payables turnover An activity ratio calculated as cost of goods sold divided by payables. Nike Inc.'s payables turnover increased from 2012 to 2013 but then declined significantly from 2013 to 2014.

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Working Capital Turnover

Nike Inc., working capital turnover 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)
Current assets 13,696  13,626  11,531  11,297  10,959  9,734 
Less: Current liabilities 5,027  3,926  3,865  3,958  3,364  3,277 
Working capital 8,669  9,700  7,666  7,339  7,595  6,457 
Revenues 27,799  25,313  24,128  20,862  19,014  19,176 
Ratio
Working capital turnover1 3.21 2.61 3.15 2.84 2.50 2.97
Benchmarks
Working Capital Turnover, Industry
Consumer Goods 16.25 16.91 21.02 16.16 27.28

Source: Based on data from Nike Inc. Annual Reports

2014 Calculations

1 Working capital turnover = Revenues ÷ Working capital
= 27,799 ÷ 8,669 = 3.21

Ratio Description The company
Working capital turnover An activity ratio calculated as revenue divided by working capital. Nike Inc.'s working capital turnover deteriorated from 2012 to 2013 but then improved from 2013 to 2014 exceeding 2012 level.

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Average Inventory Processing Period

Nike Inc., average inventory processing period 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
Inventory turnover 3.89 4.16 4.08 4.18 5.00 4.49
Ratio (no. of days)
Average inventory processing period1 94 88 90 87 73 81
Benchmarks (no. of days)
Average Inventory Processing Period, Industry
Consumer Goods 48 49 45 47 50

Source: Based on data from Nike Inc. Annual Reports

2014 Calculations

1 Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 3.89 = 94

Ratio Description The company
Average inventory processing period An activity ratio equal to the number of days in the period divided by inventory turnover over the period. Nike Inc.'s average inventory processing period improved from 2012 to 2013 but then deteriorated significantly from 2013 to 2014.

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Average Receivable Collection Period

Nike Inc., average receivable collection period 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
Receivables turnover 8.10 8.12 7.36 6.65 7.18 6.65
Ratio (no. of days)
Average receivable collection period1 45 45 50 55 51 55
Benchmarks (no. of days)
Average Receivable Collection Period, Industry
Consumer Goods 28 31 27 29 26

Source: Based on data from Nike Inc. Annual Reports

2014 Calculations

1 Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 8.10 = 45

Ratio Description The company
Average receivable collection period An activity ratio equal to the number of days in the period divided by receivables turnoverd.

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Operating Cycle

Nike Inc., operating cycle calculation, comparison to benchmarks

No. of days

 
May 31, 2014 May 31, 2013 May 31, 2012 May 31, 2011 May 31, 2010 May 31, 2009
Selected Financial Data
Average inventory processing period 94 88 90 87 73 81
Average receivable collection period 45 45 50 55 51 55
Ratio
Operating cycle1 139 133 140 142 124 136
Benchmarks
Operating Cycle, Industry
Consumer Goods 76 80 72 76 76

Source: Based on data from Nike Inc. Annual Reports

2014 Calculations

1 Operating cycle = Average inventory processing period + Average receivable collection period
= 94 + 45 = 139

Ratio Description The company
Operating cycle Equal to average inventory processing period plus average receivables collection period. Nike Inc.'s operating cycle improved from 2012 to 2013 but then slightly deteriorated from 2013 to 2014 not reaching 2012 level.

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Average Payables Payment Period

Nike Inc., average payables payment period 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
Payables turnover 7.95 8.67 8.60 7.73 8.14 10.24
Ratio (no. of days)
Average payables payment period1 46 42 42 47 45 36
Benchmarks (no. of days)
Average Payables Payment Period, Industry
Consumer Goods 54 58 50 54 39

Source: Based on data from Nike Inc. Annual Reports

2014 Calculations

1 Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 7.95 = 46

Ratio Description The company
Average payables payment period An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period.

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Cash Conversion Cycle

Nike Inc., cash conversion cycle calculation, comparison to benchmarks

No. of days

 
May 31, 2014 May 31, 2013 May 31, 2012 May 31, 2011 May 31, 2010 May 31, 2009
Selected Financial Data
Average inventory processing period 94 88 90 87 73 81
Average receivable collection period 45 45 50 55 51 55
Average payables payment period 46 42 42 47 45 36
Ratio
Cash conversion cycle1 93 91 98 95 79 100
Benchmarks
Cash Conversion Cycle, Industry
Consumer Goods 22 22 22 22 37

Source: Based on data from Nike Inc. Annual Reports

2014 Calculations

1 Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 94 + 45 – 46 = 93

Ratio Description The company
Cash conversion cycle A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. Nike Inc.'s cash conversion cycle improved from 2012 to 2013 but then slightly deteriorated from 2013 to 2014.

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