Nike Inc. (NYSE:NKE)

Current Income Tax Expense

The current income tax expense exhibits a generally increasing trend from 2020 through 2024, rising from 728 million USD in 2020 to a peak of 1497 million USD in 2024. This suggests an escalation in the company’s taxable income or changes in tax rates or policies affecting the current tax liabilities. However, in 2025, there is a noticeable decline to 954 million USD, indicating a significant reduction in current tax expense compared to the prior year.

Deferred Income Tax Expense

The deferred income tax expense displays a predominantly negative pattern, indicating deferred tax benefits or reductions in tax liabilities in future periods. The values fluctuate considerably, with the deferred expense consistently negative and ranging from -117 million USD in 2023 to -650 million USD in 2022. The largest negative deferred tax impact occurs in 2022, suggesting substantial temporary differences or tax adjustments deferred from that period. Despite some variability, deferred tax expenses remain significant and consistently reduce the overall tax expense in most years.

Total Income Tax Expense

The total income tax expense, which combines current and deferred tax amounts, shows noticeable volatility over the observed years. It rose sharply from 348 million USD in 2020 to 934 million USD in 2021, followed by a decline to 605 million USD in 2022. Then again, it increased substantially to 1131 million USD in 2023 and slightly decreased to 1000 million USD in 2024. In 2025, there is a decline to 666 million USD. The fluctuation in total tax expense appears to be influenced strongly by the changes in the deferred tax component, which mitigates or amplifies the current tax expense variations.

Summary

Overall, the data indicate that the current tax expense generally increased over the period with a peak in 2024 before declining in 2025. The deferred tax component has a counterbalancing effect on the total tax expense, showing significant fluctuations with primarily negative values, indicative of deferred tax benefits. The total income tax expense is therefore subject to considerable variability due to these dynamics, reflecting changes in tax positions, timing differences, and possibly tax planning strategies impacting the company's reported tax liabilities over the periods analyzed.

Federal income tax rate

The federal income tax rate has remained stable at 21% consistently over the six-year period.

State taxes, net of federal benefit

State taxes have shown a general upward trend, increasing from 0.8% in 2020 to 2.0% in 2025, with small fluctuations, indicating growing state tax obligations relative to federal benefits.

Foreign earnings

Foreign earnings exhibit volatility, starting at 5.9% in 2020, dropping significantly to 0.2% in 2021 and negative in 2022 (-1.8%). Recovery is seen in 2023 (1.7%) but turns negative again in 2024 (-2.5%) before improving to 1.1% in 2025. This suggests fluctuating international profitability or tax effects from foreign operations.

U.S. tax regulations, foreign currency losses

This category is only noted in 2025 with a negative value of -3.4%, reflecting a one-time or new impact due to foreign currency losses affecting tax regulations.

Subpart F deferred tax benefit

Reported only in 2022 as -4.7%, indicating a temporary deferred tax benefit related to controlled foreign corporations during that period.

Foreign-derived intangible income benefit

This benefit is consistently negative, ranging from -8.1% in 2020 to around -4.8% to -6.1% in subsequent years, indicating a persistent tax advantage reducing overall tax liability related to intangible income sourced from foreign markets.

Stock-based compensation

Stock-based compensation's impact on tax rates has decreased in negativity, starting at -7.2% in 2020 and improving to a positive effect of 1.5% by 2025. This trend reflects changes in accounting or tax treatment related to equity compensation.

Income tax audits and contingency reserves

This item fluctuates but shows an increasing positive effect post-2020, moving from -1.4% to 2.7% by 2025, suggesting an increasing burden or recognition of additional tax liabilities due to audits or contingencies.

U.S. research and development tax credit

The R&D tax credit contribution has generally deepened its negative impact on tax expenses, moving from -1.8% to -2.1% by 2024 and 2025, reflecting a growing use or importance of these credits in reducing taxable income.

Other, net

This category varies without a clear trend, oscillating between positive and negative effects, which implies miscellaneous tax items with no stable influence on the overall tax rate.

Effective income tax rate

The effective income tax rate shows variability, starting at 20.2% in 2020, dropping sharply to 9.1% in 2022, then rising again to 18.2% in 2023 before settling around 14.9% in 2024 and 17.1% in 2025. This fluctuation reflects the combined impacts of the various tax factors and benefits described above, including foreign earnings volatility and changes in tax credits and compensations.

The financial data reveals several noteworthy trends across the examined periods.

Inventories

Inventories exhibit fluctuations, initially declining from 84 million to 78 million, then sharply increasing to 136 million by May 2022, followed by reductions to 69 million in May 2024, and a subsequent rise to 98 million in May 2025. This indicates variable inventory management or supply chain adjustments over the years.

Sales Return Reserves

Sales return reserves decreased from 115 million to 89 million between 2020 and 2023, then sharply increased to 205 million by 2025. This rising trajectory in later years may suggest increasing return rates or more conservative provisioning for returns.

Deferred Compensation

Deferred compensation shows a steady upward trend, rising from 295 million in 2020 to 387 million in 2025, indicating growing obligations related to employee compensation over time.

Stock-Based Compensation

Stock-based compensation consistently increased from 168 million to a peak of 290 million in 2024, with a slight decrease to 285 million in 2025. This reflects a general increase in equity-based incentives awarded to employees.

Reserves and Accrued Liabilities

These liabilities fluctuated, declining from 120 million to 96 million by 2021, rising again to 145 million in 2022, and then decreasing before climbing back to 143 million in 2025, indicating varying levels of accrued expenses and reserves over time.

Operating Lease Liabilities

Operating lease liabilities remained relatively stable around 490-510 million through 2020 to 2023, but began declining to 458 million by 2025, possibly due to lease terminations or renegotiations.

Intangibles

Intangible assets increased from 187 million in 2021 to 275 million in 2022, then steadily declined to 217 million by 2025, suggesting asset amortization or disposals.

Capitalized Research and Development Expenditures

This category shows significant growth from 189 million in 2020 to 923 million in 2025, indicating increased investment in R&D activities capitalized on the balance sheet.

Net Operating Loss Carry-Forwards

After an initial decline from 21 million to 8 million, these assets increased substantially to 75 million by 2025, possibly reflecting accumulated losses available to offset future taxable income.

Subpart F Deferred Tax

Starting from 313 million in 2022, this deferred tax liability rose to 409 million in 2024 before decreasing to 315 million in 2025, pointing to changes in taxable income recognition from foreign subsidiaries.

Foreign Tax Credit Carry-Forwards

Data is limited, showing 103 million in 2022 only, with no reported figures for other years.

Other Items

Amounts categorized as "Other" increased overall from 127 million to 212 million, with fluctuations indicating various miscellaneous assets or liabilities.

Deferred Tax Assets

Deferred tax assets consistently increased from 1,610 million in 2020 to 3,318 million in 2025, reflecting growing recognized future tax benefits.

Valuation Allowance

A negative balance increased in magnitude over the years (from -26 million to -51 million), indicating a higher allowance reducing deferred tax assets due to uncertainty about realization.

Deferred Tax Assets after Valuation Allowance

Despite rising valuation allowances, net deferred tax assets increased significantly from 1,584 million to 3,267 million, demonstrating an overall increase in recognized deferred tax benefits.

Foreign Withholding Tax on Undistributed Earnings of Foreign Subsidiaries

Consistently negative but lessening slightly from -165 million to -119 million, showing reduction in withholding tax liabilities over time.

Property, Plant, and Equipment

Net values remained negative, deepening initially from -232 million to -290 million by 2024, then improving to -225 million, which may be due to disposals or depreciation adjustments.

Right-of-Use Assets

These assets declined from -423 million to -377 million, indicating amortization or lease expirations reducing the recognized lease asset base.

Other Deferred Items

Items labeled as "Other" within deferred amounts shifted from negative -32 million to -4 million, showing a reduction in these liabilities or assets.

Deferred Tax Liabilities

Deferred tax liabilities increased in negativity from -852 million to a peak of -959 million and then decreased to -725 million, suggesting changes in temporary tax differences.

Net Deferred Tax Asset (Liability)

This net figure increased steadily from 732 million to 2,542 million, indicating a strong improving position in tax-related deferred assets relative to liabilities.

Overall, the financial data highlights increasing commitments in compensation and research and development, alongside dynamic movements in inventories and tax-related items. Deferred tax assets have grown significantly, countered somewhat by rising valuation allowances, while operating leases and tangible assets demonstrate a declining trend. The fluctuations in reserves and liabilities point to active management of obligations and contingencies over the periods analyzed.

The financial data reveals clear trends in the company's deferred tax assets and liabilities over the six-year period from May 31, 2020, to May 31, 2025.

Deferred Tax Assets

The deferred tax assets exhibit a consistent upward trajectory. Starting at $732 million in 2020, these assets increase sharply to $1,133 million in 2021. This growth continues robustly in the subsequent years, reaching $1,891 million in 2022 and $2,026 million in 2023. By 2024, the assets further rise to $2,465 million and then to $2,668 million in 2025. Overall, the deferred tax assets nearly quadruple over the six-year span, indicating enhanced recognition of deductible temporary differences or carryforwards that the company expects to utilize in the future.

Deferred Tax Liabilities

The deferred tax liabilities data is not available for the initial two years but show recorded values from 2022 onwards. In 2022, liabilities stand at $226 million and remain virtually flat in 2023 with $227 million. Subsequently, there is a noticeable decline to $145 million in 2024 and a further decrease to $126 million in 2025. This downward trend in deferred tax liabilities might reflect a reduction in taxable temporary differences or possibly changes in tax planning strategies.

Comparative Insight

The gap between deferred tax assets and liabilities widens substantially over the observed period. While deferred tax assets rise consistently, deferred tax liabilities, after an initial plateau, decline significantly. This divergence enhances the net deferred tax asset position of the company, potentially improving future tax benefit realizations.

The financial data reveals several notable trends over the six-year period ending May 31, 2025. Total assets, when reported, increased significantly from 31,342 million USD in 2020 to a peak of 40,321 million USD in 2022, followed by a decline to 36,579 million USD by 2025. Adjusted total assets show a similar pattern but with lower values, starting at 30,610 million USD in 2020 and decreasing to 33,911 million USD in 2025 after peaking in 2022. This suggests asset adjustments primarily reduced the asset base throughout the reviewed period.

Regarding liabilities, reported total liabilities rose modestly from 23,287 million USD in 2020 to approximately 25,040 million USD by 2022 but then declined, reaching 23,366 million USD in 2025. Adjusted liabilities mirror this trend closely, indicating minimal adjustments between reported and adjusted figures for liabilities. The consistency in adjusted liabilities against reported figures highlights stable debt management over the years.

Shareholders' equity showed substantial growth from 8,055 million USD in 2020 to a peak of 15,281 million USD in 2022 in the reported data, before falling to 13,213 million USD in 2025. Adjusted shareholders’ equity follows the same trend but at consistently lower levels, starting at 7,323 million USD and declining to 10,671 million USD in 2025. This pattern reflects overall equity growth followed by a reduction, potentially due to changes in retained earnings or revaluation adjustments affecting equity.

Net income revealed strong growth early in the period, with reported figures increasing significantly from 2,539 million USD in 2020 to 6,046 million USD in 2022, followed by a decrease to 3,219 million USD in 2025. Adjusted net income mirrors the reported trend, also peaking in 2022 but with somewhat lower values and experiencing a sharper decline by 2025. The decline in net income post-2022 might indicate increased costs, declining revenues, or other operational challenges impacting profitability.

Overall, the company experienced asset growth and profitability improvement until 2022, after which both assets and earnings contracted. Liabilities remained relatively stable throughout the period, indicating consistent financial leverage. Adjusted figures, which likely account for tax and valuation adjustments, present a more conservative view of the company’s financial position but follow the same general trends. The decline in adjusted shareholders’ equity and net income after 2022 warrants attention for underlying causes and future financial outlook.

Net Profit Margin

The reported net profit margin experienced significant growth from 6.79% in 2020 to a peak of 12.94% in 2022, before declining to 6.95% in 2025. The adjusted net profit margin follows a similar pattern, rising from 5.77% in 2020 to 11.99% in 2021 and slightly decreasing thereafter, reaching 6.33% in 2025. Overall, both reported and adjusted margins show strong improvement through 2021–2022 but then exhibit a downward trend towards 2025.

Total Asset Turnover

Reported total asset turnover remained relatively stable from 1.19 in 2020 to 1.16 in 2022, then increased to 1.36 in 2023 and slightly decreased to 1.27 by 2025. Adjusted total asset turnover shows a higher consistency, beginning at 1.22 in 2020, maintaining that level through 2022, and increasing to 1.44 in 2023 and 2024, with a modest decline to 1.37 in 2025. This indicates improved efficiency in asset utilization during the middle years, with some normalization afterward.

Financial Leverage

Reported financial leverage declined steadily from 3.89 in 2020 to 2.64 in 2022 and remained fairly stable around 2.64-2.77 through 2025. Adjusted financial leverage follows a similar decreasing trend from 4.18 in 2020 to 2.82 in 2022 but shows a gradual increase afterward, reaching 3.18 in 2025. This suggests an initial reduction in reliance on debt or other leverage instruments, with some re-leveraging occurring in the later periods on an adjusted basis.

Return on Equity (ROE)

The reported ROE rose significantly from 31.52% in 2020 to a high of 44.86% in 2021, then declined gradually to 24.36% by 2025. The adjusted ROE exhibited a similar rise, reaching an apex of 45.92% in 2021, followed by a more moderate decrease, remaining relatively high around 40–43% from 2022 to 2024 before dropping to 27.47% in 2025. This reflects strong profitability relative to equity in the earlier years with some weakening by the end of the period.

Return on Assets (ROA)

Reported ROA increased markedly from 8.1% in 2020 to 15.17% in 2021, then stabilized between 13.5% and 15% through 2024 before falling to 8.8% in 2025. Adjusted ROA also rose from 7.05% to 14.59% in the first two years, remained consistent near 14% in the subsequent years, and declined to 8.64% in the final period. This indicates improved asset profitability early on, with diminished returns in the last observed year.

Net Income Trends

The reported net income demonstrates notable fluctuations over the six-year period. It rises sharply from 2,539 million US dollars in 2020 to a peak of 6,046 million US dollars in 2022, followed by a decline to 3,219 million US dollars in 2025. A similar pattern is observed for adjusted net income, which increases from 2,159 million US dollars in 2020 to 5,396 million US dollars in 2022, then decreases to 2,931 million US dollars in 2025. Both metrics show an overall growth in the initial years, peaking in 2022, with a subsequent declining trend in later years.

Net Profit Margin Variations

The reported net profit margin aligns with the net income trends, increasing significantly from 6.79% in 2020 to a high of 12.94% in 2022, then declining to 6.95% in 2025. The adjusted net profit margin follows a comparable trajectory, rising from 5.77% in 2020 to 11.55% in 2022, then dropping to 6.33% in 2025. Both margins indicate improved profitability up to 2022, followed by a reduction in margin levels thereafter.

Comparison Between Reported and Adjusted Figures

Throughout the period, adjusted net income and adjusted net profit margin are consistently lower than their reported counterparts, suggesting that the adjustments related to deferred income tax and other factors reduce the apparent financial performance. The gap between reported and adjusted figures remains relatively stable, indicating consistent application of adjustments over time.

Overall Financial Insights

The data reveals a period of enhanced profitability culminating around 2022, after which both income and profitability margins decline. This pattern may reflect external market conditions, operational changes, or tax-related adjustments impacting financial outcomes. The steady difference between reported and adjusted measures underscores the significance of tax-related adjustments in evaluating the company's true financial performance.

The analysis of the financial data reveals several noteworthy trends and patterns over the reported periods.

Total Assets

Reported total assets increased steadily from 31,342 million US dollars in 2020 to a peak of 40,321 million in 2022, demonstrating an expansion phase during these years. Subsequently, total assets declined, reaching 36,579 million by 2025. Adjusted total assets followed a similar trajectory but consistently remained below reported total assets, indicating the impact of adjustments primarily related to income tax considerations. The adjusted figures rose from 30,610 million in 2020 to 38,430 million in 2022 and then decreased to 33,911 million in 2025.

Total Asset Turnover Ratio

Reported total asset turnover, a measure of sales generated per unit of asset, showed a slight downward trend from 1.19 in 2020 to 1.16 in 2022, suggesting a marginal reduction in asset efficiency during that period. However, a significant improvement occurred in 2023, with turnover increasing to 1.36, which was sustained at a slightly lower level of 1.27 in 2025. Adjusted total asset turnover consistently exceeded the reported ratio across all periods, starting at 1.22 in 2020, maintaining that level through 2022, and then rising sharply to 1.44 in 2023 and 2024 before a modest decrease to 1.37 in 2025. This indicates that when adjustments are accounted for, asset utilization appears more efficient.

Overall, the data suggests a phase of asset growth until 2022 followed by a contraction. Despite this, asset turnover improved significantly after 2022, implying enhanced operational efficiency or better management of asset base during the latter years. The disparity between reported and adjusted figures underscores the effect of deferred income tax adjustments, which consistently portray a slightly more favorable view of asset utilization and asset base.

The analysis of the financial data over the six-year period reveals several noteworthy trends in the asset base, equity position, and leverage ratios when considering both reported and adjusted figures.

Total Assets

Both reported and adjusted total assets increased from 2020 through 2022, reaching peaks in 2022 at approximately $40.3 billion (reported) and $38.4 billion (adjusted). After 2022, total assets declined steadily through 2025, with reported assets falling to around $36.6 billion and adjusted assets to about $33.9 billion. The adjusted asset figures consistently remain slightly below the reported figures, indicating adjustments typically reduce asset values.

Shareholders’ Equity

Shareholders’ equity demonstrated a strong upward trajectory from 2020 to 2022, with reported equity rising from $8.1 billion to $15.3 billion, and adjusted equity increasing from $7.3 billion to $13.6 billion. However, equity levels decreased from 2022 onward, with reported equity declining to approximately $13.2 billion by 2025, and adjusted equity dropping more sharply to roughly $10.7 billion. Adjusted equity remains consistently lower than reported equity, suggesting that deferred income tax and other adjustments reduce the net equity base.

Financial Leverage

The reported financial leverage ratio decreased significantly from 3.89 in 2020 to a low of 2.64 in 2022 and remained relatively stable through 2024 before a slight increase to 2.77 in 2025. Adjusted financial leverage followed a similar pattern but at higher levels, declining from 4.18 in 2020 to 2.82 in 2022, then gradually increasing again to 3.18 by 2025. The higher adjusted leverage ratios indicate that when adjustments are considered, the company appears more leveraged, reflecting a lower adjusted equity base relative to assets.

Overall Patterns and Insights

The data indicates a growth phase up to 2022 characterized by increasing assets and equity alongside deleveraging. Post-2022, the company experienced contraction in both assets and equity, accompanied by a mild increase in leverage, particularly in adjusted terms. The persistent difference between reported and adjusted figures highlights the impact of deferred income tax and related adjustments on the company’s financial structure, suggesting that adjusted data provides a more conservative view of financial strength and leverage.

Net Income Trends

The reported net income displayed a strong upward trajectory from 2,539 million US dollars in 2020 to a peak of 6,046 million in 2022. This was followed by a decline to 5,070 million in 2023, a slight recovery in 2024 at 5,700 million, and a significant decrease in 2025 to 3,219 million. The adjusted net income exhibited a similar pattern, rising from 2,159 million in 2020 to 5,396 million in 2022, then falling to 4,953 million in 2023 and showing a modest rebound to 5,203 million in 2024 before dropping substantially to 2,931 million in 2025. Overall, income peaked in 2022, with a downward correction in subsequent years.

Shareholders’ Equity Trends

Reported shareholders’ equity increased consistently from 8,055 million in 2020 to 15,281 million in 2022, reflecting strong capital growth. Post-2022, equity decreased to 14,004 million in 2023, then slightly increased to 14,430 million in 2024 before declining to 13,213 million in 2025. Adjusted shareholders’ equity showed a parallel trend, rising from 7,323 million in 2020 to 13,616 million in 2022, then declining steadily to 12,205 million in 2023, 12,110 million in 2024, and further down to 10,671 million in 2025. These trends suggest a peak in equity around 2022 followed by gradual reduction.

Return on Equity (ROE) Analysis

Reported ROE demonstrated a strong increase from 31.52% in 2020 to a high of 44.86% in 2021. It then declined to 39.57% in 2022 and continued falling to 36.20% in 2023, followed by a recovery to 39.5% in 2024 and a significant drop to 24.36% in 2025. Adjusted ROE followed a similar trajectory but with higher peaks and troughs: starting at 29.48% in 2020, rising to 45.92% in 2021, peaking again at 42.96% in 2024 before dropping to 27.47% in 2025. The overall pattern shows volatility with notable peaks in 2021 and 2024 and a marked decline in the final year observed.

Insights and Summary

The data reveals that both reported and adjusted income figures grew substantially until 2022, indicating a period of robust profitability. Thereafter, a downward trend ensued, with some partial recovery before the decline sharply intensified in 2025. Shareholders’ equity followed a similar pattern, peaking in 2022, which aligns with peak income periods, before declining over the next three years. The ROE metrics, indicative of profitability relative to equity, showed strong performance in 2021 and 2024, but a marked decrease in 2025 suggests reduced efficiency in generating profit from equity. The adjusted figures generally mirror the reported figures but tend to be slightly more conservative, providing a cautious view of financial performance. Collectively, these patterns suggest initial growth and peak profitability up to 2022, followed by financial challenges and reduced returns in the subsequent period, particularly pronounced in 2025.

Net Income Trends

The reported net income showed a significant increase from 2,539 million USD in 2020 to a peak of 6,046 million USD in 2022. Following this peak, there was a decline to 5,070 million USD in 2023, a slight recovery to 5,700 million USD in 2024, and then a notable drop to 3,219 million USD in 2025. The adjusted net income follows a similar trajectory, rising from 2,159 million USD in 2020 to 5,396 million USD in 2022, then decreasing to 4,953 million USD in 2023, marginally increasing to 5,203 million USD in 2024, and declining sharply to 2,931 million USD in 2025.

Total Assets Trends

The reported total assets increased steadily from 31,342 million USD in 2020 to a high of 40,321 million USD in 2022. Afterward, there was a decrease to 37,531 million USD in 2023, a slight increase to 38,110 million USD in 2024, followed by a decline to 36,579 million USD in 2025. Adjusted total assets displayed a closely aligned pattern, rising from 30,610 million USD in 2020 to 38,430 million USD in 2022, then falling to 35,505 million USD in 2023, with a small rise to 35,645 million USD in 2024, and further decreasing to 33,911 million USD in 2025.

Return on Assets (ROA) Trends

Reported ROA increased substantially from 8.1% in 2020 to a peak of 15.17% in 2021, remaining relatively stable around 15% through 2022 and 2024, with a slight dip to 13.51% in 2023. However, it declined sharply to 8.8% in 2025. Adjusted ROA mirrored this pattern, climbing from 7.05% in 2020 to 14.59% in 2021, stabilizing near 14% in subsequent years until a decrease to 8.64% in 2025.

Overall Insights

The financial data indicate an overall growth phase from 2020 through 2022, characterized by increasing net income, total assets, and ROA. Starting in 2023, the company experienced fluctuations with declines in net income and total assets, followed by a partial recovery. The dramatic drop in both net income and ROA in 2025 suggests potential challenges impacting profitability and asset efficiency during that period. Adjusted figures consistently track just below reported values, indicating tax and other adjustments that moderately reduce the financial results but maintain the same trend patterns throughout the reported years.