Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Nike Inc. (NYSE:NKE)

Analysis of Goodwill and Intangible Assets

Advanced level

Goodwill and Intangible Asset Disclosure

Nike Inc., balance sheet: goodwill and intangible assets

US$ in millions

Microsoft Excel LibreOffice Calc
May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015
Acquired trademarks and other, gross carrying amount 47  22  22  19  16  17 
Accumulated amortization (19) (20) (18) (17) (16) (17)
Acquired trademarks and other, net carrying amount 28  —  — 
Indefinite-lived trademarks 246  281  281  281  281  281 
Identifiable intangible assets, net 274  283  285  283  281  281 
Goodwill 223  154  154  139  131  131 
Identifiable intangible assets and goodwill 497  437  439  422  412  412 

Based on: 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), 10-K (filing date: 2015-07-23).

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 2018 to 2019 and from 2019 to 2020.
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.
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 decreased from 2018 to 2019 but then increased from 2019 to 2020 exceeding 2018 level.

Adjustments to Financial Statements: Removal of Goodwill

Nike Inc., adjustments to financial statements

US$ in millions

Microsoft Excel LibreOffice Calc
May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015
Adjustment to Total Assets
Total assets (as reported) 31,342  23,717  22,536  23,259  21,396  21,600 
Less: Goodwill 223  154  154  139  131  131 
Total assets (adjusted) 31,119  23,563  22,382  23,120  21,265  21,469 
Adjustment to Shareholders’ Equity
Shareholders’ equity (as reported) 8,055  9,040  9,812  12,407  12,258  12,707 
Less: Goodwill 223  154  154  139  131  131 
Shareholders’ equity (adjusted) 7,832  8,886  9,658  12,268  12,127  12,576 

Based on: 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), 10-K (filing date: 2015-07-23).


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, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015
Total Asset Turnover
Reported total asset turnover 1.19 1.65 1.62 1.48 1.51 1.42
Adjusted total asset turnover 1.20 1.66 1.63 1.49 1.52 1.43
Financial Leverage
Reported financial leverage 3.89 2.62 2.30 1.87 1.75 1.70
Adjusted financial leverage 3.97 2.65 2.32 1.88 1.75 1.71
Return on Equity (ROE)
Reported ROE 31.52% 44.57% 19.70% 34.17% 30.67% 25.76%
Adjusted ROE 32.42% 45.34% 20.01% 34.56% 31.01% 26.03%
Return on Assets (ROA)
Reported ROA 8.10% 16.99% 8.58% 18.23% 17.57% 15.15%
Adjusted ROA 8.16% 17.10% 8.64% 18.34% 17.68% 15.25%

Based on: 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), 10-K (filing date: 2015-07-23).

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 improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.
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 2018 to 2019 and from 2019 to 2020.
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity. Nike Inc.’s adjusted ROE improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020 not reaching 2018 level.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Nike Inc.’s adjusted ROA improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

Nike Inc., Financial Ratios: Reported vs. Adjusted


Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Revenues 37,403  39,117  36,397  34,350  32,376  30,601 
Total assets 31,342  23,717  22,536  23,259  21,396  21,600 
Activity Ratio
Total asset turnover1 1.19 1.65 1.62 1.48 1.51 1.42
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Revenues 37,403  39,117  36,397  34,350  32,376  30,601 
Adjusted total assets 31,119  23,563  22,382  23,120  21,265  21,469 
Activity Ratio
Adjusted total asset turnover2 1.20 1.66 1.63 1.49 1.52 1.43

Based on: 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), 10-K (filing date: 2015-07-23).

2020 Calculations

1 Total asset turnover = Revenues ÷ Total assets
= 37,403 ÷ 31,342 = 1.19

2 Adjusted total asset turnover = Revenues ÷ Adjusted total assets
= 37,403 ÷ 31,119 = 1.20

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 improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Total assets 31,342  23,717  22,536  23,259  21,396  21,600 
Shareholders’ equity 8,055  9,040  9,812  12,407  12,258  12,707 
Solvency Ratio
Financial leverage1 3.89 2.62 2.30 1.87 1.75 1.70
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets 31,119  23,563  22,382  23,120  21,265  21,469 
Adjusted shareholders’ equity 7,832  8,886  9,658  12,268  12,127  12,576 
Solvency Ratio
Adjusted financial leverage2 3.97 2.65 2.32 1.88 1.75 1.71

Based on: 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), 10-K (filing date: 2015-07-23).

2020 Calculations

1 Financial leverage = Total assets ÷ Shareholders’ equity
= 31,342 ÷ 8,055 = 3.89

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted shareholders’ equity
= 31,119 ÷ 7,832 = 3.97

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 2018 to 2019 and from 2019 to 2020.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income 2,539  4,029  1,933  4,240  3,760  3,273 
Shareholders’ equity 8,055  9,040  9,812  12,407  12,258  12,707 
Profitability Ratio
ROE1 31.52% 44.57% 19.70% 34.17% 30.67% 25.76%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income 2,539  4,029  1,933  4,240  3,760  3,273 
Adjusted shareholders’ equity 7,832  8,886  9,658  12,268  12,127  12,576 
Profitability Ratio
Adjusted ROE2 32.42% 45.34% 20.01% 34.56% 31.01% 26.03%

Based on: 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), 10-K (filing date: 2015-07-23).

2020 Calculations

1 ROE = 100 × Net income ÷ Shareholders’ equity
= 100 × 2,539 ÷ 8,055 = 31.52%

2 Adjusted ROE = 100 × Net income ÷ Adjusted shareholders’ equity
= 100 × 2,539 ÷ 7,832 = 32.42%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity. Nike Inc.’s adjusted ROE improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020 not reaching 2018 level.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income 2,539  4,029  1,933  4,240  3,760  3,273 
Total assets 31,342  23,717  22,536  23,259  21,396  21,600 
Profitability Ratio
ROA1 8.10% 16.99% 8.58% 18.23% 17.57% 15.15%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income 2,539  4,029  1,933  4,240  3,760  3,273 
Adjusted total assets 31,119  23,563  22,382  23,120  21,265  21,469 
Profitability Ratio
Adjusted ROA2 8.16% 17.10% 8.64% 18.34% 17.68% 15.25%

Based on: 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), 10-K (filing date: 2015-07-23).

2020 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 2,539 ÷ 31,342 = 8.10%

2 Adjusted ROA = 100 × Net income ÷ Adjusted total assets
= 100 × 2,539 ÷ 31,119 = 8.16%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Nike Inc.’s adjusted ROA improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.