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

Nike Inc. (NYSE:NKE)

Analysis of Operating Leases

Advanced level

An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee balance sheet, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.


Present Value of Future Operating Lease Payments (before Adoption of FASB Topic 842)

Nike Inc., future operating lease payments (before adoption of FASB Topic 842)

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
Total undiscounted future operating lease payments 3,732  3,965  3,905  3,231  2,974 
Discount rate1 3.15% 3.03% 2.91% 3.45% 3.82%
 
Total present value of future operating lease payments 3,234  3,449  3,397  2,774  2,511 

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).

1 Weighted-average interest rate for Nike Inc.’s debt

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 3.15%
2020 553  2020 553  536 
2021 513  2021 513  482 
2022 441  2022 441  402 
2023 386  2023 386  341 
2024 345  2024 345  295 
2025 and thereafter 1,494  2025 345  286 
2026 345  278 
2027 345  269 
2028 345  261 
2029 114  84 
Total: 3,732  3,732  3,234 

Based on: 10-K (filing date: 2019-07-23).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 3.03%
2019 589  2019 589  572 
2020 523  2020 523  493 
2021 472  2021 472  432 
2022 412  2022 412  366 
2023 361  2023 361  311 
2024 and thereafter 1,608  2024 361  302 
2025 361  293 
2026 361  284 
2027 361  276 
2028 164  122 
Total: 3,965  3,965  3,449 

Based on: 10-K (filing date: 2018-07-25).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 2.91%
2018 537  2018 537  522 
2019 509  2019 509  481 
2020 438  2020 438  402 
2021 399  2021 399  356 
2022 350  2022 350  303 
2023 and thereafter 1,672  2023 350  295 
2024 350  286 
2025 350  278 
2026 350  270 
2027 272  204 
Total: 3,905  3,905  3,397 

Based on: 10-K (filing date: 2017-07-20).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 3.45%
2017 491  2017 491  475 
2018 453  2018 453  423 
2019 395  2019 395  357 
2020 347  2020 347  303 
2021 301  2021 301  254 
2022 and thereafter 1,244  2022 301  246 
2023 301  237 
2024 301  229 
2025 301  222 
2026 40  28 
Total: 3,231  3,231  2,774 

Based on: 10-K (filing date: 2016-07-21).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 3.82%
2016 447  2016 447  431 
2017 423  2017 423  392 
2018 371  2018 371  332 
2019 311  2019 311  268 
2020 268  2020 268  222 
2021 and thereafter 1,154  2021 268  214 
2022 268  206 
2023 268  199 
2024 268  191 
2025 82  56 
Total: 2,974  2,974  2,511 

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


Adjustments to Financial Statements for Operating Leases

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 
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)1 —  3,234  3,449  3,397  2,774  2,511 
Total assets (adjusted) 31,342  26,951  25,985  26,656  24,170  24,111 
Adjustment to Total Debt
Total debt (as reported) 9,657  3,479  3,810  3,802  2,055  1,260 
Add: Operating lease liability (before adoption of FASB Topic 842)2 —  3,234  3,449  3,397  2,774  2,511 
Add: Current portion of operating lease liabilities 445  —  —  —  —  — 
Add: Operating lease liabilities, excluding current portion 2,913  —  —  —  —  — 
Total debt (adjusted) 13,015  6,713  7,259  7,199  4,829  3,771 

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).

1, 2 Equal to total present value of future operating lease payments.


Nike Inc., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios for Operating Leases (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 Turnover1
Reported total asset turnover 1.19 1.65 1.62 1.48 1.51 1.42
Adjusted total asset turnover 1.19 1.45 1.40 1.29 1.34 1.27
Debt to Equity2
Reported debt to equity 1.20 0.38 0.39 0.31 0.17 0.10
Adjusted debt to equity 1.62 0.74 0.74 0.58 0.39 0.30
Return on Assets3 (ROA)
Reported ROA 8.10% 16.99% 8.58% 18.23% 17.57% 15.15%
Adjusted ROA 8.10% 14.95% 7.44% 15.91% 15.56% 13.57%

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 debt to equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Nike Inc.’s adjusted debt to equity ratio deteriorated from 2018 to 2019 and from 2019 to 2020.
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 slightly deteriorated from 2019 to 2020 not reaching 2018 level.

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 Operating Leases
Selected Financial Data (US$ in millions)
Revenues 37,403  39,117  36,397  34,350  32,376  30,601 
Adjusted total assets 31,342  26,951  25,985  26,656  24,170  24,111 
Activity Ratio
Adjusted total asset turnover2 1.19 1.45 1.40 1.29 1.34 1.27

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 ÷ 31,342 = 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 improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

Adjusted Debt to Equity

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 debt 9,657  3,479  3,810  3,802  2,055  1,260 
Shareholders’ equity 8,055  9,040  9,812  12,407  12,258  12,707 
Solvency Ratio
Debt to equity1 1.20 0.38 0.39 0.31 0.17 0.10
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt 13,015  6,713  7,259  7,199  4,829  3,771 
Shareholders’ equity 8,055  9,040  9,812  12,407  12,258  12,707 
Solvency Ratio
Adjusted debt to equity2 1.62 0.74 0.74 0.58 0.39 0.30

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 Debt to equity = Total debt ÷ Shareholders’ equity
= 9,657 ÷ 8,055 = 1.20

2 Adjusted debt to equity = Adjusted total debt ÷ Shareholders’ equity
= 13,015 ÷ 8,055 = 1.62

Solvency ratio Description The company
Adjusted debt-to-equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Nike Inc.’s adjusted debt-to-equity ratio deteriorated from 2018 to 2019 and from 2019 to 2020.

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 Operating Leases
Selected Financial Data (US$ in millions)
Net income 2,539  4,029  1,933  4,240  3,760  3,273 
Adjusted total assets 31,342  26,951  25,985  26,656  24,170  24,111 
Profitability Ratio
Adjusted ROA2 8.10% 14.95% 7.44% 15.91% 15.56% 13.57%

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 ÷ 31,342 = 8.10%

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 slightly deteriorated from 2019 to 2020 not reaching 2018 level.