Nike Inc. (NYSE:NKE)

The financial data reveals several notable trends regarding profitability and leverage over the evaluated periods.

Return on Assets (ROA)

The ROA starts reporting from May 31, 2020, showing a steady upward trajectory, from 8.1% to a peak of approximately 16.04% as of November 30, 2021. After this peak, ROA experiences a gradual decline with minor fluctuations, ending at 8.8% in August 31, 2024, and further decreasing to 8.8% by May 31, 2025. This pattern suggests an initial improvement in asset profitability that wanes over time.

Financial Leverage

The leverage ratio begins at 2.85 in August 31, 2019, slightly fluctuating initially but showing a distinct downward trend from May 31, 2020 (3.89) to August 31, 2021 (2.64). After this decline, the leverage ratio stabilizes around the 2.6 to 2.7 range through May 31, 2025, indicating a deliberate reduction and maintenance of more conservative debt levels or equity financing relative to assets over the medium-term.

Return on Equity (ROE)

The ROE data, available from May 31, 2020, presents a sharp increase from 31.52% to a significant peak of 44.86% by August 31, 2021. Following this, ROE gradually declines with some oscillations, settling at 24.36% by May 31, 2025. The trend mirrors that of ROA but remains at consistently higher levels, reflecting effective use of leverage to enhance shareholder returns despite the eventual decrease.

In summary, the company experienced strong improvements in asset and equity returns through late 2021, accompanied by a reduction in financial leverage. Subsequently, both ROA and ROE have exhibited a downward trend, suggesting diminished profitability or efficiency, while leverage has remained relatively stable at a moderate level. This pattern may indicate changing operational conditions or strategic shifts affecting overall profitability.

The quarterly financial ratios exhibit noticeable trends in profitability, efficiency, leverage, and returns over the observed periods.

Net Profit Margin

The net profit margin begins appearing from May 31, 2020, at 6.79%. It initially rises steadily, peaking at 13.32% by February 28, 2022. After this peak, a gradual decline follows, with fluctuations around the 10% range during 2023, and dropping sharply to 6.95% by May 31, 2025. This indicates a period of strong profitability followed by erosion in margin efficiencies in recent quarters.

Asset Turnover

Starting from May 31, 2020, the asset turnover ratio is 1.19 and generally demonstrates a rising trend, reaching a high of 1.4 by May 31, 2023. Following this peak, the ratio slightly declines but remains relatively stable around 1.27 as of May 31, 2025. This suggests improvements in asset utilization efficiency over time with some recent stabilization.

Financial Leverage

Financial leverage experienced considerable variation, initially high at 3.89 in May 31, 2020, then consistently declining to a low near 2.6 from August 31, 2021, through August 31, 2023. A minor increase is then observed towards the end of the period, rising to around 2.77 by May 31, 2025. This trajectory indicates a strategic reduction in leverage during the middle years, followed by a moderate increase recently.

Return on Equity (ROE)

ROE shows substantial fluctuations, starting at 31.52% in May 31, 2020. It decreases towards February 28, 2021, then spikes sharply to a peak of 44.86% on August 31, 2021. Subsequently, ROE trends downward with some volatility, reaching 24.36% by May 31, 2025. The initial high and subsequent decline could reflect changes in profit margins, asset efficiency, and leverage dynamics impacting shareholder returns.

In summary, the analyzed periods reveal that profitability, as represented by net profit margin and ROE, achieved strong levels in 2021–2022 but declined thereafter. Asset turnover has generally improved, indicating better asset efficiency, while financial leverage was strategically reduced and then modestly increased. The mixed movements across these ratios suggest shifts in operational efficiency, capital structure, and profit generation capacity that merit continued monitoring to understand underlying drivers and address the recent downward pressure on profitability and returns.

The financial ratios for the company show distinct trends over the periods analyzed, indicating evolving operational efficiency and profitability dynamics.

Net Profit Margin (%)

The net profit margin begins with missing data but emerges at 6.79% in May 2020, increasing steadily to peak at 13.32% in February 2022. Subsequently, there is a gradual decline observed, with the margin decreasing to 6.95% by May 2025. This pattern suggests an initial improvement in profitability followed by a period of margin compression.

Asset Turnover (ratio)

Asset turnover starts at 1.19 in May 2020, experiences modest fluctuations with a slight decline to 1.06 by the same year’s end, then generally trends upwards, reaching a high of 1.4 in May 2023. After this peak, there is a moderate decline and the ratio stabilizes around 1.27 by May 2025, demonstrating relatively consistent efficiency in utilizing assets to generate revenue over the period.

Return on Assets (ROA) (%)

ROA exhibits an increase from 8.1% in May 2020 to a peak of 16.04% in November 2021, reflecting significant improvement in profitability relative to total assets. Post-peak, a declining trend is apparent, with ROA falling to 8.8% by May 2025. This trajectory aligns closely with changes in net profit margin and underscores the combined impact of profitability and asset utilization on overall return.

In summary, the data reveal a cycle of rising profitability and asset efficiency leading up to early 2022, followed by a gradual decrease in both profit margin and return on assets through 2025. Despite the later declines, asset turnover remains relatively stable, indicating maintained asset usage efficiency even as profitability ratios moderate.