Stock Analysis on Net
Stock Analysis on Net

Nike Inc. (NYSE:NKE)

Analysis of Goodwill and Intangible Assets

Microsoft Excel LibreOffice Calc

Goodwill and Intangible Asset Disclosure

Nike Inc., balance sheet: goodwill and intangible assets

US$ in millions

Microsoft Excel LibreOffice Calc
May 31, 2021 May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016
Indefinite-lived trademarks 246  246  281  281  281  281 
Acquired trademarks and other, gross carrying amount 50  47  22  22  19  16 
Accumulated amortization (27) (19) (20) (18) (17) (16)
Acquired trademarks and other, net carrying amount 23  28  — 
Identifiable intangible assets, net 269  274  283  285  283  281 
Goodwill 242  223  154  154  139  131 
Identifiable intangible assets and goodwill 511  497  437  439  422  412 

Based on: 10-K (filing date: 2021-07-20), 10-K (filing date: 2020-07-24), 10-K (filing date: 2019-07-23), 10-K (filing date: 2018-07-25), 10-K (filing date: 2017-07-20), 10-K (filing date: 2016-07-21).

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.’s identifiable intangible assets, net decreased from 2019 to 2020 and from 2020 to 2021.
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.’s goodwill increased from 2019 to 2020 and from 2020 to 2021.
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.’s identifiable intangible assets and goodwill increased from 2019 to 2020 and from 2020 to 2021.

Adjustments to Financial Statements: Removal of Goodwill

Nike Inc., adjustments to financial statements

US$ in millions

Microsoft Excel LibreOffice Calc
May 31, 2021 May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016
Adjustment to Total Assets
Total assets (as reported) 37,740  31,342  23,717  22,536  23,259  21,396 
Less: Goodwill 242  223  154  154  139  131 
Total assets (adjusted) 37,498  31,119  23,563  22,382  23,120  21,265 
Adjustment to Shareholders’ Equity
Shareholders’ equity (as reported) 12,767  8,055  9,040  9,812  12,407  12,258 
Less: Goodwill 242  223  154  154  139  131 
Shareholders’ equity (adjusted) 12,525  7,832  8,886  9,658  12,268  12,127 

Based on: 10-K (filing date: 2021-07-20), 10-K (filing date: 2020-07-24), 10-K (filing date: 2019-07-23), 10-K (filing date: 2018-07-25), 10-K (filing date: 2017-07-20), 10-K (filing date: 2016-07-21).


Nike Inc., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios: Removal of Goodwill (Summary)

Nike Inc., adjusted financial ratios

Microsoft Excel LibreOffice Calc
May 31, 2021 May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016
Total Asset Turnover
Reported total asset turnover 1.18 1.19 1.65 1.62 1.48 1.51
Adjusted total asset turnover 1.19 1.20 1.66 1.63 1.49 1.52
Financial Leverage
Reported financial leverage 2.96 3.89 2.62 2.30 1.87 1.75
Adjusted financial leverage 2.99 3.97 2.65 2.32 1.88 1.75
Return on Equity (ROE)
Reported ROE 44.86% 31.52% 44.57% 19.70% 34.17% 30.67%
Adjusted ROE 45.72% 32.42% 45.34% 20.01% 34.56% 31.01%
Return on Assets (ROA)
Reported ROA 15.17% 8.10% 16.99% 8.58% 18.23% 17.57%
Adjusted ROA 15.27% 8.16% 17.10% 8.64% 18.34% 17.68%

Based on: 10-K (filing date: 2021-07-20), 10-K (filing date: 2020-07-24), 10-K (filing date: 2019-07-23), 10-K (filing date: 2018-07-25), 10-K (filing date: 2017-07-20), 10-K (filing date: 2016-07-21).

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Nike Inc.’s adjusted total asset turnover ratio deteriorated from 2019 to 2020 and from 2020 to 2021.
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.’s adjusted financial leverage ratio increased from 2019 to 2020 but then slightly decreased from 2020 to 2021 not reaching 2019 level.
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity. Nike Inc.’s adjusted ROE deteriorated from 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Nike Inc.’s adjusted ROA deteriorated from 2019 to 2020 but then improved from 2020 to 2021 not reaching 2019 level.

Nike Inc., Financial Ratios: Reported vs. Adjusted


Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
May 31, 2021 May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Revenues 44,538  37,403  39,117  36,397  34,350  32,376 
Total assets 37,740  31,342  23,717  22,536  23,259  21,396 
Activity Ratio
Total asset turnover1 1.18 1.19 1.65 1.62 1.48 1.51
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Revenues 44,538  37,403  39,117  36,397  34,350  32,376 
Adjusted total assets 37,498  31,119  23,563  22,382  23,120  21,265 
Activity Ratio
Adjusted total asset turnover2 1.19 1.20 1.66 1.63 1.49 1.52

Based on: 10-K (filing date: 2021-07-20), 10-K (filing date: 2020-07-24), 10-K (filing date: 2019-07-23), 10-K (filing date: 2018-07-25), 10-K (filing date: 2017-07-20), 10-K (filing date: 2016-07-21).

2021 Calculations

1 Total asset turnover = Revenues ÷ Total assets
= 44,538 ÷ 37,740 = 1.18

2 Adjusted total asset turnover = Revenues ÷ Adjusted total assets
= 44,538 ÷ 37,498 = 1.19

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Nike Inc.’s adjusted total asset turnover ratio deteriorated from 2019 to 2020 and from 2020 to 2021.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
May 31, 2021 May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Total assets 37,740  31,342  23,717  22,536  23,259  21,396 
Shareholders’ equity 12,767  8,055  9,040  9,812  12,407  12,258 
Solvency Ratio
Financial leverage1 2.96 3.89 2.62 2.30 1.87 1.75
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets 37,498  31,119  23,563  22,382  23,120  21,265 
Adjusted shareholders’ equity 12,525  7,832  8,886  9,658  12,268  12,127 
Solvency Ratio
Adjusted financial leverage2 2.99 3.97 2.65 2.32 1.88 1.75

Based on: 10-K (filing date: 2021-07-20), 10-K (filing date: 2020-07-24), 10-K (filing date: 2019-07-23), 10-K (filing date: 2018-07-25), 10-K (filing date: 2017-07-20), 10-K (filing date: 2016-07-21).

2021 Calculations

1 Financial leverage = Total assets ÷ Shareholders’ equity
= 37,740 ÷ 12,767 = 2.96

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted shareholders’ equity
= 37,498 ÷ 12,525 = 2.99

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.’s adjusted financial leverage ratio increased from 2019 to 2020 but then slightly decreased from 2020 to 2021 not reaching 2019 level.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
May 31, 2021 May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Net income 5,727  2,539  4,029  1,933  4,240  3,760 
Shareholders’ equity 12,767  8,055  9,040  9,812  12,407  12,258 
Profitability Ratio
ROE1 44.86% 31.52% 44.57% 19.70% 34.17% 30.67%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income 5,727  2,539  4,029  1,933  4,240  3,760 
Adjusted shareholders’ equity 12,525  7,832  8,886  9,658  12,268  12,127 
Profitability Ratio
Adjusted ROE2 45.72% 32.42% 45.34% 20.01% 34.56% 31.01%

Based on: 10-K (filing date: 2021-07-20), 10-K (filing date: 2020-07-24), 10-K (filing date: 2019-07-23), 10-K (filing date: 2018-07-25), 10-K (filing date: 2017-07-20), 10-K (filing date: 2016-07-21).

2021 Calculations

1 ROE = 100 × Net income ÷ Shareholders’ equity
= 100 × 5,727 ÷ 12,767 = 44.86%

2 Adjusted ROE = 100 × Net income ÷ Adjusted shareholders’ equity
= 100 × 5,727 ÷ 12,525 = 45.72%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity. Nike Inc.’s adjusted ROE deteriorated from 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
May 31, 2021 May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Net income 5,727  2,539  4,029  1,933  4,240  3,760 
Total assets 37,740  31,342  23,717  22,536  23,259  21,396 
Profitability Ratio
ROA1 15.17% 8.10% 16.99% 8.58% 18.23% 17.57%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income 5,727  2,539  4,029  1,933  4,240  3,760 
Adjusted total assets 37,498  31,119  23,563  22,382  23,120  21,265 
Profitability Ratio
Adjusted ROA2 15.27% 8.16% 17.10% 8.64% 18.34% 17.68%

Based on: 10-K (filing date: 2021-07-20), 10-K (filing date: 2020-07-24), 10-K (filing date: 2019-07-23), 10-K (filing date: 2018-07-25), 10-K (filing date: 2017-07-20), 10-K (filing date: 2016-07-21).

2021 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 5,727 ÷ 37,740 = 15.17%

2 Adjusted ROA = 100 × Net income ÷ Adjusted total assets
= 100 × 5,727 ÷ 37,498 = 15.27%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Nike Inc.’s adjusted ROA deteriorated from 2019 to 2020 but then improved from 2020 to 2021 not reaching 2019 level.