Stock Analysis on Net
Stock Analysis on Net

Nike Inc. (NYSE:NKE)

Return on Capital (ROC)

Microsoft Excel LibreOffice Calc

Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company’s debt and equity structure. It measures business productivity performance.


Return on Invested Capital (ROIC)

Nike Inc., ROIC calculation

Microsoft Excel LibreOffice Calc
May 31, 2021 May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 5,490  2,477  4,182  2,703  4,046  3,720 
Invested capital2 21,022  19,083  14,182  15,218  15,685  13,344 
Performance Ratio
ROIC3 26.11% 12.98% 29.49% 17.76% 25.79% 27.87%

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).

1 NOPAT. See details »

2 Invested capital. See details »

3 2021 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 5,490 ÷ 21,022 = 26.11%

Performance ratio Description The company
ROIC A measure of the periodic, after tax, cash-on-cash yield earned in the business. Nike Inc.’s ROIC deteriorated from 2019 to 2020 but then improved from 2020 to 2021 not reaching 2019 level.

Decomposition of ROIC

Nike Inc., decomposition of ROIC

Microsoft Excel LibreOffice Calc
ROIC = OPM1 × TO2 × 1 – CTR3
May 31, 2021 26.11% = 15.45% × 2.12 × 79.79%
May 31, 2020 12.98% = 8.66% × 1.96 × 76.44%
May 31, 2019 29.49% = 12.66% × 2.76 × 84.46%
May 31, 2018 17.76% = 12.35% × 2.39 × 60.15%
May 31, 2017 25.79% = 14.61% × 2.19 × 80.59%
May 31, 2016 27.87% = 14.53% × 2.43 × 79.09%

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).

1 Operating profit margin (OPM). See calculations »

2 Turnover of capital (TO). See calculations »

3 Effective cash tax rate (CTR). See calculations »

The primary reason for the increase in return on invested capital (ROIC) over 2021 year is the increase in profitability measured by operating profit margin (OPM) ratio.


Operating Profit Margin (OPM)

Nike Inc., OPM calculation

Microsoft Excel LibreOffice Calc
May 31, 2021 May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 5,490  2,477  4,182  2,703  4,046  3,720 
Add: Cash operating taxes2 1,390  764  770  1,791  974  983 
Net operating profit before taxes (NOPBT) 6,880  3,241  4,952  4,495  5,020  4,703 
 
Revenues 44,538  37,403  39,117  36,397  34,350  32,376 
Profitability Ratio
OPM3 15.45% 8.66% 12.66% 12.35% 14.61% 14.53%

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).

1 NOPAT. See details »

2 Cash operating taxes. See details »

3 2021 Calculation
OPM = 100 × NOPBT ÷ Revenues
= 100 × 6,880 ÷ 44,538 = 15.45%

Profitability ratio Description The company
OPM The operating profit margin (OPM) is the ratio of pretax economic earnings, or NOPBT, to sales. Nike Inc.’s OPM deteriorated from 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level.

Turnover of Capital (TO)

Nike Inc., TO calculation

Microsoft Excel LibreOffice Calc
May 31, 2021 May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016
Selected Financial Data (US$ in millions)
Revenues 44,538  37,403  39,117  36,397  34,350  32,376 
Invested capital1 21,022  19,083  14,182  15,218  15,685  13,344 
Efficiency Ratio
TO2 2.12 1.96 2.76 2.39 2.19 2.43

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).

1 Invested capital. See details »

2 2021 Calculation
TO = Revenues ÷ Invested capital
= 44,538 ÷ 21,022 = 2.12

Efficiency ratio Description The company
TO The turnover of capital (TO) is the ratio of sales to invested capital. Capital turnover is a function of the efficiency of working capital management and of net fixed assets. Nike Inc.’s TO deteriorated from 2019 to 2020 but then slightly improved from 2020 to 2021.

Effective Cash Tax Rate (CTR)

Nike Inc., CTR calculation

Microsoft Excel LibreOffice Calc
May 31, 2021 May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 5,490  2,477  4,182  2,703  4,046  3,720 
Add: Cash operating taxes2 1,390  764  770  1,791  974  983 
Net operating profit before taxes (NOPBT) 6,880  3,241  4,952  4,495  5,020  4,703 
Tax Rate
CTR3 20.21% 23.56% 15.54% 39.85% 19.41% 20.91%

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).

1 NOPAT. See details »

2 Cash operating taxes. See details »

3 2021 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 1,390 ÷ 6,880 = 20.21%

Tax rate Description The company
CTR Effective cash tax rate on operating income. Nike Inc.’s CTR increased from 2019 to 2020 but then slightly decreased from 2020 to 2021.