Nike Inc. (NYSE:NKE)

Current Income Tax Expense

The current income tax expense demonstrated a general upward trend over the analyzed periods. Beginning at 738 million USD in 2019, it slightly decreased to 728 million USD in 2020 but then increased significantly to 1319 million USD in 2021. After a minor decline in 2022 and 2023 to approximately 1250 million USD, the figure rose again to 1497 million USD in 2024, marking the highest value in the given timeline.

Deferred Income Tax Expense

The deferred income tax expense showed notable volatility and predominantly negative values after 2019. Starting at a positive 34 million USD in 2019, it sharply shifted to a negative 380 million USD in 2020 and remained around similar negative levels in the subsequent years. The most significant deferred tax reduction was observed in 2022 with -650 million USD, followed by fluctuations to -117 million USD in 2023 and -497 million USD in 2024. This persistent negative deferred tax expense indicates recurring deferred tax benefits or adjustments reducing overall tax liabilities in these years.

Total Income Tax Expense

The total income tax expense, a sum of current and deferred components, exhibited considerable fluctuations. Starting at 772 million USD in 2019, it drastically dropped to 348 million USD in 2020, paralleling the steep negative deferred tax expense that year. A strong rebound was noted in 2021 with 934 million USD, followed by a decline to 605 million USD in 2022. The tax expense rose again sharply to 1131 million USD in 2023 before decreasing to 1000 million USD in 2024. These fluctuations reflect the impact of deferred tax adjustments on total tax expense and suggest variability in underlying taxable income and tax planning effects across periods.

The analysis of the annual financial data reveals several key trends regarding tax-related items over the periods from May 31, 2019, through May 31, 2024.

Federal income tax rate

This rate remained stable at 21% throughout all observed years, indicating consistent federal tax policy or company adherence to prevailing federal tax regulations.

State taxes, net of federal benefit

State taxes showed minor fluctuations, starting at 1.2% in 2019, dipping to 0.8% in 2020, then gradually increasing to 1.5% in 2023 before slightly decreasing to 1.4% in 2024. This suggests a general upward trend with some variability, possibly reflecting state tax rate changes or adjustments related to state tax benefits offset at the federal level.

Foreign earnings

Foreign earnings as a percentage exhibited volatility. From a negative contribution of -2.1% in 2019, the figure rose sharply to 5.9% in 2020, then dropped close to zero in 2021, declined again to -1.8% in 2022, recovered slightly to 1.7% in 2023, and fell to -2.5% in 2024. This pattern indicates fluctuating international performance or tax impacts from foreign income across the years.

Subpart F deferred tax benefit

Data was only available for 2021, showing a notable negative value of -4.7%, implying a sizeable deferred tax expense or adjustment under Subpart F rules in that specific year. No other years reported this item.

Foreign-derived intangible income benefit

This benefit consistently showed negative percentages, starting at -8.1% in 2020 and maintaining a range between -3.7% and -6.1% through 2024. The persistent negative values suggest ongoing deductions or tax credits related to intangible foreign income, decreasing the effective tax burden each year.

Excess tax benefits from share-based compensation

The excess tax benefits decreased sharply from -3.6% in 2019 to -7.2% in 2020, then trend upward to a lesser negative impact of -0.5% by 2024. This indicates reduced tax-related benefits associated with share-based compensation over time.

Income tax audits and contingency reserves

Values varied, with no data in 2019, followed by a negative impact of -1.4% in 2020, and positive impacts ranging from 1.0% to 1.8% in subsequent years. This might reflect varying audit outcomes or changes in reserved amounts for tax contingencies, generally contributing positively from 2021 onwards.

U.S. research and development tax credit

The tax credit displayed moderate fluctuation around approximately -1%, with a slight increase in benefit to -2.1% by 2024. This indicates an increasing advantage received from R&D tax credits over the observed period.

Other, net

Other net items showed volatility but remained relatively small, starting at 0.7% in 2019, rising to 2.9% in 2020, and later declining towards 0.6% in 2024. This category appears to represent miscellaneous tax-related effects with no clear directional trend.

Effective income tax rate

The effective tax rate fluctuated notably, from 16.1% in 2019 increasing to 20.2% in 2020, dropping sharply to 9.1% in 2022, then rising back to 18.2% in 2023, and declining again to 14.9% in 2024. These changes point to a dynamic tax environment influenced by multiple factors including foreign earnings, tax credits, and specific deferred tax adjustments.

Overall, the data depicts a complex and shifting tax landscape with consistent federal rates but significant variability in state tax impacts, foreign-related tax items, and benefits from share-based compensation and R&D credits. The effective income tax rate reflects these diverse influences, highlighting fluctuating tax planning outcomes and external tax policy effects over the period.

The financial data reveals multiple trends across various items over the six-year period ending May 31, 2024.

Inventories

Inventory levels experienced fluctuations, initially rising from 66 million in 2019 to 84 million in 2020, then decreasing and spiking to 136 million in 2022 before dropping again to 69 million by 2024, indicating variable stock management or demand shifts.

Sales Return Reserves

Sales return reserves steadily declined from 128 million in 2019 to a low of 89 million in 2023 but showed a notable increase back to 125 million in 2024, suggesting changing patterns in product returns or changes in return policies.

Deferred Compensation

Deferred compensation rose from 271 million in 2019 to a peak of 350 million in 2021, then fluctuated, ending slightly lower at 347 million in 2024, indicating overall growth with some variability.

Stock-based Compensation

Stock-based compensation demonstrated consistent growth, increasing from 156 million in 2019 to 290 million in 2024, reflecting possible increased reliance on equity incentives.

Reserves and Accrued Liabilities

These liabilities showed variability, rising notably from 101 million in 2019 to 145 million in 2022, followed by a decline to 113 million in 2024, pointing to fluctuations in accrued obligations or reserves.

Operating Lease Liabilities

Operating lease liabilities, first reported in 2020 at 491 million, showed a slight upward trend peaking at 511 million in 2022, then gradually declining to 474 million in 2024, which may indicate changes in leasing arrangements or lease terminations.

Intangibles

Intangible assets first recorded in 2021 at 187 million increased to 275 million in 2022 but then decreased steadily to 236 million by 2024, suggesting amortization or impairment impacts.

Capitalized Research and Development Expenditures

Capitalized R&D expenditures showed rapid and continuous growth from 189 million in 2020 to 878 million in 2024, implying increased investment in product development and innovation.

Net Operating Loss Carry-forwards

These tax assets declined significantly from 81 million in 2019 to 8 million in 2022, but then recovered slightly to 21 million in 2024, reflecting utilization of losses over time.

Subpart F Deferred Tax

Reported starting 2022 at 313 million, subpart F deferred taxes increased to 409 million in 2024, indicating recognition of foreign income tax implications.

Foreign Tax Credit Carry-forwards

Recorded only in 2022 at 103 million and absent in other years, suggesting a one-time recognition or reclassification event.

Other

The category labeled "Other" fluctuated without a clear pattern, ranging from 125 million in 2019 to 214 million in 2024.

Deferred Tax Assets

Deferred tax assets grew consistently from 928 million in 2019 to 3,176 million in 2024, demonstrating increasing deferred tax benefits.

Valuation Allowance

The valuation allowance moved from a negative 88 million in 2019 to a negative 29 million in 2024, indicating a reduction in deferred tax asset valuation reserves over time.

Deferred Tax Assets after Valuation Allowance

This net figure mirrored the growth of deferred tax assets, rising from 840 million in 2019 to 3,147 million in 2024, reinforcing the pattern of increased recognized tax benefit.

Foreign Withholding Tax on Undistributed Earnings of Foreign Subsidiaries

This liability ranged between negative 235 million in 2019 and negative 131 million in 2024, showing a decreasing trend which may reflect changes in foreign earnings distribution or tax planning.

Property, Plant and Equipment

Negative values in this category suggest accumulated depreciation or disposals, with the amount increasing in magnitude from negative 188 million in 2019 to negative 290 million in 2024.

Right-of-use Assets

Reported from 2020 onward, these assets remained relatively stable around negative 420 to negative 440 million through 2023, then decreased in magnitude to negative 397 million in 2024, indicating lease asset amortization or fewer obligations.

Other (second occurrence)

This second "Other" category, showing negative values, fluctuated greatly, beginning at negative 41 million in 2019 and improving to negative 9 million in 2024.

Deferred Tax Liabilities

Deferred tax liabilities increased in magnitude from negative 464 million in 2019 to a peak of negative 959 million in 2023 before decreasing to negative 827 million in 2024, reflecting changing deferred tax obligations.

Net Deferred Tax Asset (Liability)

This net figure showed a strong positive trend, increasing from 376 million in 2019 to 2,320 million in 2024, indicating an overall strengthening of net deferred tax assets position.

Assets Trends

Total assets, both reported and adjusted, exhibited consistent growth from May 31, 2019, through May 31, 2022, with reported total assets increasing from 23,717 million to 40,321 million US dollars and adjusted total assets rising similarly from 23,341 million to 38,656 million US dollars. However, there is a noticeable decline in the following periods, with reported total assets decreasing to 37,531 million in May 2023 and slightly increasing to 38,110 million by May 2024. Adjusted total assets followed the same downward trend, falling to 35,732 million in May 2023 and further marginally decreasing to 35,790 million in May 2024. The trends suggest peak asset levels in 2022, followed by a contraction phase in the subsequent two years.

Shareholders’ Equity Patterns

Reported shareholders’ equity showed volatility within the analyzed period. Initially, it decreased from 9,040 million US dollars in May 2019 to 8,055 million US dollars by May 2020. Then, a substantial increase occurred, reaching 15,281 million US dollars by May 2022. Subsequently, equity declined slightly to 14,004 million in May 2023 but rebounded to 14,430 million by May 2024. Adjusted shareholders’ equity followed a similar trajectory, declining from 8,664 million in 2019 to 7,323 million in 2020, rising steadily to 13,616 million by 2022, and then decreasing to 12,205 million in 2023 and 12,110 million in 2024. The data indicate a recovery and growth phase in equity from 2020 to 2022, followed by a modest decline thereafter, with adjusted figures consistently lower than reported ones.

Net Income Developments

Reported net income demonstrated significant fluctuations within the examined periods. Starting at 4,029 million US dollars in May 2019, it sharply decreased to 2,539 million in May 2020, followed by a strong recovery to a peak of 6,046 million in May 2022. This peak was succeeded by a decline to 5,070 million in May 2023, before a partial recovery to 5,700 million in May 2024. Adjusted net income followed a similar trend but with generally lower values, decreasing from 4,063 million in 2019 to 2,159 million in 2020, then recovering to 5,396 million in 2022, tapering to 4,953 million in 2023, and slightly increasing to 5,203 million in 2024. These trends demonstrate a pronounced sensitivity of net income to external or internal factors in 2020, with subsequent recovery but with some volatility in later years.

Overall Insights

The data indicate that the company experienced growth in assets and equity until 2022, accompanied by fluctuating but overall positive net income trends, reflecting recovery from a downturn in 2020. The decline in asset levels and shareholders’ equity after 2022 may hint at strategic asset optimization or external pressures impacting financial position. The consistent difference between reported and adjusted values suggests adjustments related to income tax considerations have a material effect on financial statement figures, particularly impacting equity and net income. The fluctuations in net income, especially in 2020, point toward significant events affecting profitability which showed signs of recovery but with some instability in subsequent years.

Net Profit Margin Trends

The reported net profit margin exhibited fluctuations over the years, starting at 10.3% in 2019, dipping to its lowest point of 6.79% in 2020, before peaking at 12.94% in 2022, and then declining again to 9.9% in 2023 with a slight recovery to 11.1% in 2024. The adjusted net profit margin mirrored this pattern but consistently showed slightly lower values, indicating the effects of adjustments primarily related to income tax considerations.

Total Asset Turnover Trends

The reported total asset turnover ratio showed a declining trend from 1.65 in 2019 to 1.16 in 2022, followed by a recovery to 1.36 in 2023 and stabilizing at 1.35 in 2024. Adjusted total asset turnover followed a similar pattern but with slightly higher values throughout the period, suggesting adjustments lead to a marginal improvement in asset utilization measures.

Financial Leverage Trends

Reported financial leverage rose substantially from 2.62 in 2019 to a peak of 3.89 in 2020, then declined steadily to about 2.64 by 2024. The adjusted financial leverage consistently exceeded reported figures, peaking at 4.18 in 2020, and thereafter falling to a still elevated level of approximately 2.96 in 2024. This suggests that the adjustments account for elements that increase the apparent leverage during the most volatile years, particularly in the pandemic period of 2020.

Return on Equity (ROE) Trends

Reported ROE showed a significant decline from 44.57% in 2019 to 31.52% in 2020, recovering strongly to 44.86% in 2021, then tapering off gradually to 36.2% in 2023 and rising slightly to 39.5% in 2024. Adjusted ROE followed a parallel trend but was generally higher in 2019 and 2021-2024, and notably lower in 2020, indicating that deferred and adjusted tax items impacted equity returns differently, especially during the pandemic year.

Return on Assets (ROA) Trends

The reported ROA diminished sharply from 16.99% in 2019 to 8.1% in 2020, followed by a steady improvement to 15.17% in 2021, before declining modestly to around 13.51% in 2023 and slightly recovering to 14.96% in 2024. Adjusted ROA values were consistently slightly higher except for 2020, where it dropped more significantly to 7.05%. This indicates the adjusted performance metrics capture a more conservative view of asset profitability during downturns.

Overall Insights

The data reveals a notable impact of the 2020 period, likely influenced by external economic conditions, resulting in decreases across profitability and efficiency ratios. Adjustments related to income tax and deferred tax items consistently affect financial ratios, often resulting in more conservative profitability and leverage measures. Post-2020, performance trends generally indicate a recovery in operational efficiency and profitability, but with varying degrees of stabilization. The leverage ratios suggest a temporary increase in financial risk during 2020, which was subsequently managed downwards. The adjusted figures provide a nuanced perspective that highlights the importance of considering tax impacts when analyzing financial performance.

Net Income Trends

The reported net income exhibited significant fluctuations over the periods analyzed. There was a notable decline from 4,029 million USD in 2019 to 2,539 million USD in 2020, followed by a substantial recovery in 2021 with reported net income reaching 5,727 million USD. The net income remained relatively stable in 2022 at 6,046 million USD before declining again to 5,070 million USD in 2023 and then increasing to 5,700 million USD in 2024.

The adjusted net income generally mirrors the trend of reported net income but exhibits a slightly more pronounced dip in 2020, falling to 2,159 million USD, and a lower recovery in subsequent years compared to reported figures. The adjusted net income peaked at 5,396 million USD in 2022 and showed a decline to 4,953 million USD in 2023, then a moderate increase to 5,203 million USD in 2024.

Net Profit Margin Analysis

The reported net profit margin similarly fluctuated, decreasing sharply from 10.3% in 2019 to 6.79% in 2020, indicating lower profitability relative to revenue during this period. A significant recovery occurred in 2021 and 2022, reaching a peak of approximately 12.94%. However, margins decreased again in 2023 to 9.9%, then improved to 11.1% in 2024.

Adjusted net profit margins followed a comparable pattern but were consistently lower than the reported margins in all periods except for 2019 when the difference was minimal. The margin hit its low point at 5.77% in 2020 and increased to 11.55% in 2022 before declining to 9.67% in 2023 and rising again to 10.13% in 2024.

Overall Insights

The data indicates a period of volatility around 2020, with both income and profitability significantly reduced, likely reflecting external or operational challenges during that year. Subsequently, there is evidence of recovery in both reported and adjusted income measures, although the adjusted figures remain lower than reported values, suggesting the impact of deferred income tax adjustments reduces net income and margins. The fluctuations in net profit margin indicate changing efficiency or cost structure effects on profitability. The overall trend from 2021 onwards suggests stabilization with moderate improvements in financial performance through 2024.

The financial data reveals a pattern of asset growth and fluctuations in efficiency ratios over the six-year period examined.

Total Assets

Reported total assets show a general upward trend from 23,717 million US dollars in 2019 to a peak of 40,321 million in 2022, followed by a decline to 37,531 million in 2023 and a slight recovery to 38,110 million in 2024. The adjusted total assets exhibit a similar trajectory, increasing from 23,341 million in 2019 to 38,656 million in 2022, then declining to 35,732 million in 2023, with a marginal rise to 35,790 million in 2024. The close alignment between reported and adjusted total assets suggests consistent adjustments and refinements in asset reporting.

Total Asset Turnover

The reported total asset turnover ratio declines notably from 1.65 in 2019 to a low of 1.16 in 2022, indicating decreasing efficiency in generating revenue from assets during this period. However, a rebound occurs in 2023 and 2024, reaching 1.36 and 1.35 respectively, signaling improved asset utilization. Adjusted total asset turnover follows a similar but slightly higher pattern, decreasing from 1.68 in 2019 to 1.21 in 2022, then increasing to 1.43 in 2023 and 1.44 in 2024. This suggests that after accounting for deferred income tax adjustments, asset efficiency remains consistently better than the reported figures and shows an improved trend in the most recent years.

Overall, the data indicates a period of asset expansion until 2022, accompanied by declining efficiency. This is followed by asset contraction and a significant recovery in asset turnover ratios, implying enhanced operational efficiency or better asset management post-2022. Adjusted figures display similar dynamics but generally reflect slightly better performance metrics, underscoring the impact of income tax adjustments on the assessment of asset productivity.

The analysis of the financial data over the six-year period reveals several trends and notable changes in the reported and adjusted figures related to total assets, shareholders’ equity, and financial leverage.

Total Assets

Reported total assets increased consistently from 23,717 million USD in 2019 to a peak of 40,321 million USD in 2022, followed by a decline to 37,531 million USD in 2023 and a slight recovery to 38,110 million USD in 2024. The adjusted total assets mirror this pattern with values slightly lower than the reported figures throughout the period, peaking at 38,656 million USD in 2022 before declining and stabilizing near 35,700 million USD in the last two years.

Shareholders’ Equity

Reported shareholders' equity experienced a decline from 9,040 million USD in 2019 to 8,055 million USD in 2020, then rose sharply to reach 15,281 million USD in 2022. Subsequently, it decreased to 14,004 million USD in 2023 and slightly increased to 14,430 million USD in 2024. Adjusted shareholders' equity follows a similar trend but remains consistently lower, starting from 8,664 million USD in 2019, dropping to 7,323 million USD in 2020, then rising to 13,616 million USD in 2022, and declining to 12,110 million USD in 2024.

Financial Leverage

Reported financial leverage ratios were relatively volatile. The ratio increased significantly from 2.62 in 2019 to 3.89 in 2020, then decreased to 2.96 in 2021, and continued to decline gradually to 2.64 in 2022, with slight increases thereafter stabilizing at 2.64 in 2024. Adjusted financial leverage ratios follow a somewhat similar but more pronounced pattern, peaking at 4.18 in 2020, then steadily declining to the range of about 2.84 to 2.96 in the subsequent years.

Overall, the data indicate an expansion phase in total assets and shareholders’ equity until 2022, after which both metrics show a reduction or stabilization. The financial leverage ratios peaked in 2020, reflecting increased reliance on debt or liabilities relative to equity, before returning to lower and more stable levels. The adjustments made for deferred and annual income taxes slightly reduce asset and equity figures and tend to yield higher leverage ratios, suggesting that these tax adjustments have a material impact on the company's financial structure analysis.

Net Income Trends

The reported net income demonstrates significant fluctuations over the six-year period. After a high of $4,029 million in 2019, it dropped sharply to $2,539 million in 2020, reflecting a notable decline. Subsequently, there was a strong recovery with reported net income increasing to $5,727 million in 2021 and continuing to rise to $6,046 million in 2022. This was followed by a decrease to $5,070 million in 2023 before rising again to $5,700 million in 2024. Adjusted net income follows a similar pattern, showing a decrease in 2020 to $2,159 million, followed by a recovery and increase through 2021 and 2022, then a slight decline in 2023, and a moderate increase in 2024. Overall, the adjustments consistently show lower income figures compared to reported values, particularly in 2020 and 2021, indicating the impact of income tax adjustments during these years.

Shareholders’ Equity Trends

Reported shareholders’ equity shows an initial decline from $9,040 million in 2019 to $8,055 million in 2020, followed by a strong growth trajectory reaching $12,767 million in 2021 and $15,281 million in 2022. After peaking in 2022, equity values decreased slightly to $14,004 million in 2023 and marginally increased to $14,430 million in 2024. Adjusted shareholders’ equity mimics this trend but at consistently lower levels. It falls from $8,664 million in 2019 to $7,323 million in 2020, climbs steadily to $11,634 million in 2021 and $13,616 million in 2022, then declines to $12,205 million in 2023 and $12,110 million in 2024. This pattern reflects the impact of adjustments likely related to deferred taxes or other equity-related adjustments.

Return on Equity (ROE) Trends

Reported ROE follows a pattern of volatility combined with strong performance. It decreases significantly from 44.57% in 2019 to 31.52% in 2020, then recovers sharply to 44.86% in 2021. It slightly declines thereafter to 39.57% in 2022, falls further to 36.2% in 2023, and rises again to 39.5% in 2024. The adjusted ROE demonstrates a broader range, beginning at 46.9% in 2019, dipping more significantly to 29.48% in 2020, reaching a peak of 45.92% in 2021, and then stabilizing around the 39-43% range from 2022 to 2024. Notably, adjusted ROE exceeds reported ROE in the recent years from 2022 onward, indicating that after tax and other adjustments, equity returns appear more favorable than raw reported numbers suggest in those periods.

Overall Insights

The financial data indicate that the company endured a challenging year in 2020, impacting net income, equity, and ROE negatively. However, it experienced a robust recovery starting in 2021, with marked increases in profitability and equity levels. The persistence of variation between reported and adjusted values throughout the period highlights the material effect of income tax and other adjustments on the company's financial position and performance metrics. While both reported and adjusted metrics show cyclical trends, the adjustments provide a more conservative view on income and equity, and an enhanced perspective on returns, particularly in the later years analyzed.

Net Income Trends

The reported net income experienced a significant decline from 4,029 million USD in 2019 to 2,539 million USD in 2020, reflecting a notable contraction possibly due to market or operational challenges. Subsequently, a substantial recovery occurred in 2021 with reported net income reaching 5,727 million USD, maintaining a relatively stable level in 2022 at 6,046 million USD. A slight decrease was observed in 2023, dropping to 5,070 million USD, followed by a rebound to 5,700 million USD in 2024. Adjusted net income follows a similar pattern but shows a more marked decrease in 2020 from 4,063 million USD in 2019 to 2,159 million USD, with recovery extending to 5,342 million USD in 2021 and a gradual decline through 2023 before recovering modestly in 2024.

Total Assets Analysis

Reported total assets increased steadily from 23,717 million USD in 2019 to a peak of 40,321 million USD in 2022, signaling asset base expansion over this period. However, a decline is visible in 2023, dropping to 37,531 million USD, with a marginal increase to 38,110 million USD in 2024. Adjusted total assets show a parallel trend, peaking at 38,656 million USD in 2022, followed by a sharper decline in 2023 to 35,732 million USD and remaining nearly flat at 35,790 million USD in 2024.

Return on Assets (ROA) Dynamics

Reported ROA declined sharply from 16.99% in 2019 to 8.1% in 2020, reflecting a significant reduction in asset profitability concurrent with the reduction in net income. The ratio rebounded considerably in 2021 to 15.17%, holding steady around 15% in 2022 before declining gradually over the next two years to 13.51% in 2023, then rising again to 14.96% in 2024. Adjusted ROA exhibits a similar trend, falling from 17.41% in 2019 to 7.05% in 2020, then recovering to 14.59% in 2021, with a gradual decrease through 2023 at 13.86%, and a slight improvement to 14.54% in 2024.

Overall Insights

The financial data indicate that the company faced a pronounced earnings and profitability downturn in 2020, likely linked to external disruptions affecting performance. Recovery from this low point is clear in subsequent years, with net income and ROA metrics rebounding towards pre-2020 levels. Total assets expanded notably up to 2022, supporting higher income generation, but experienced a contraction thereafter, suggesting possible asset divestitures or revaluation. The adjusted figures, which account for income tax timing differences, mirror these trends but present slightly lower outcomes in later periods, indicating the impact of deferred taxes on financial results. The consistent pattern between reported and adjusted data confirms the robustness of observed financial trends.