Nike Inc. (NYSE:NKE)

The analysis of the financial ratios over the six-year period reveals distinct trends and fluctuations in performance metrics.

Return on Assets (ROA)

The ROA experienced a notable increase from 8.1% in 2020 to a peak of 15.17% in 2021, indicating improved efficiency in asset utilization. Subsequently, it slightly declined to 14.99% in 2022 and continued a gradual downward trend to 13.51% in 2023. The ratio slightly recovered to 14.96% in 2024 before dropping significantly to 8.8% in 2025. This pattern suggests variability in asset efficiency with a recent decline that may warrant further investigation.

Financial Leverage

The financial leverage ratio showed a steady decrease from 3.89 in 2020 to 2.64 in 2022, reflecting a reduction in reliance on debt relative to equity. From 2022 to 2024, the leverage ratio remained stable around 2.64 to 2.68, suggesting a maintained capital structure strategy. A slight increase to 2.77 was observed in 2025, indicating a modest rise in debt utilization.

Return on Equity (ROE)

The ROE demonstrated a strong upward trend, increasing from 31.52% in 2020 to 44.86% in 2021, signifying higher profitability for shareholders. Following that peak, ROE declined progressively to 39.57% in 2022 and to 36.2% in 2023, before a minor rebound to 39.5% in 2024. However, a sharp decrease to 24.36% in 2025 was noted, which might be attributed to the concurrent decline in ROA and changes in leverage.

Overall, the period from 2020 to 2024 showed improvements and stabilization in profitability and leverage, whereas 2025 presented a marked downturn in both ROA and ROE, despite a slight increase in leverage. This shift could imply operational challenges or external factors affecting performance, necessitating closer scrutiny of underlying causes.

The financial data reveals notable trends in profitability, efficiency, leverage, and shareholder returns over the six-year period analyzed.

Net Profit Margin

The net profit margin shows a fluctuating pattern. It increased significantly from 6.79% in 2020 to a peak of 12.94% in 2022, indicating improved profitability during this period. However, it declined sharply to 6.95% by 2025 after a dip to 9.9% in 2023, suggesting challenges in sustaining profit levels in the latter years.

Asset Turnover

Asset turnover remained relatively stable around 1.19 and 1.16 in the early years, indicating consistent efficiency in using assets to generate revenue. It improved significantly in 2023 to 1.36 and slightly declined to 1.27 by 2025. The increase in 2023 suggests enhanced asset utilization which tapered off but remained above initial levels.

Financial Leverage

Financial leverage exhibited a downward trend from 3.89 in 2020 to 2.64 in 2022 and 2024, indicating a reduction in reliance on debt or borrowed funds. There was a slight increase to 2.77 in 2025, but overall leverage is lower compared to the start of the period, reflecting a more conservative capital structure over time.

Return on Equity (ROE)

ROE displayed a robust increase from 31.52% in 2020 to a high of 44.86% in 2021, followed by a moderate decline to 24.36% in 2025. Despite the decline toward the end, ROE remained relatively strong, demonstrating effective use of equity to generate earnings. The decline in later years likely correlates with the decreases in net profit margin and slight reductions in financial leverage.

Overall, the data suggests a period of improving operational efficiency and profitability up to the early 2020s, followed by increased volatility in profitability and returns. The company appears to have adopted a more conservative financial leverage strategy after 2020, which may have impacted returns but enhanced financial stability.

Tax Burden

The tax burden ratio experienced fluctuations over the six-year period, starting at 0.88 in 2020 and declining to 0.83 by 2025. Although there was a slight increase to 0.91 in 2022, the general trend indicates a modest reduction in the tax burden, suggesting improved tax efficiency or changes in tax strategy.

Interest Burden

The interest burden ratio remained relatively stable, hovering around 0.95 to 0.96 between 2020 and 2024, before decreasing to 0.93 in 2025. This stability implies consistent management of interest expenses relative to EBIT, with a slight improvement in 2025 indicating potentially lower interest costs or increased EBIT.

EBIT Margin

The EBIT margin showed significant variability, peaking at 15.62% in 2021 from a low of 8.12% in 2020, then gradually declining to 9.03% in 2025. This pattern indicates an initial strong profitability improvement followed by a gradual erosion of operating profitability, which may reflect increased costs, pricing pressures, or investment in growth areas.

Asset Turnover

Asset turnover remained relatively consistent, ranging between 1.16 and 1.36. It peaked at 1.36 in 2023 and slightly declined afterwards to 1.27 in 2025. This suggests relatively stable efficiency in using assets to generate revenue, with minor fluctuations potentially linked to operational adjustments or changes in asset base.

Financial Leverage

The financial leverage ratio decreased significantly from 3.89 in 2020 to a trough of 2.64 in 2022 and 2024, then marginally increased to 2.77 in 2025. This downward trend indicates a reduction in reliance on debt financing over the period, contributing to a more conservative capital structure.

Return on Equity (ROE)

ROE exhibited notable volatility, rising sharply from 31.52% in 2020 to a peak of 44.86% in 2021, then declining steadily to 24.36% in 2025. The initial increase could be attributed to improved profitability and efficiency, but the subsequent decline suggests that these gains were not sustained, possibly due to decreased operating margins or changes in leverage and asset efficiency.

The analysis of the annual financial ratios over the six-year period reveals several key trends regarding profitability, asset efficiency, and overall returns.

Net Profit Margin

This metric exhibited a significant increase from 6.79% in 2020 to a peak of approximately 12.94% in 2022, indicating improved profitability during this period. However, following this peak, the margin declined to 9.9% in 2023, experienced a slight recovery to 11.1% in 2024, and then dropped sharply again to 6.95% in 2025. This fluctuation suggests episodic challenges affecting the company’s ability to maintain consistent profitability.

Asset Turnover

The asset turnover ratio remained relatively stable in the early years, slightly decreasing from 1.19 in 2020 to 1.16 in 2022, implying a marginal reduction in how efficiently assets were used to generate revenue. Thereafter, it noticeably increased to 1.36 in 2023 and slightly decreased to 1.35 in 2024 before falling to 1.27 in 2025. This pattern indicates a temporary boost in asset utilization efficiency followed by a moderate decline.

Return on Assets (ROA)

ROA showed a strong upward trend from 8.1% in 2020 to 15.17% in 2021, maintaining near this high level (14.99%) in 2022. Subsequently, it declined gradually to 13.51% in 2023, rebounded to 14.96% in 2024, and then fell significantly to 8.8% in 2025. This trajectory mirrors the fluctuations seen in both profitability and asset use, suggesting the overall effectiveness of asset employment varied notably over the years.

In summary, the data reflect a period of improved financial performance and operational efficiency between 2020 and 2022, followed by increased volatility. The sharp declines in net profit margin and ROA in 2025 imply potential challenges that might have impacted profitability and the company's ability to generate returns from its assets. Similarly, while asset turnover saw improvements in 2023 and 2024, it did not sustain these gains, indicating variability in operational efficiency. These trends highlight areas for further investigation to understand the underlying factors influencing these key financial metrics.

The financial data reveals several notable trends over the analyzed periods. The Tax Burden ratio shows moderate fluctuations, starting at 0.88 in 2020, dipping to a low of 0.82 in 2023, and stabilizing around the mid-0.80s in the later years, indicating a relatively consistent effective tax rate with slight improvements in tax efficiency in some years.

The Interest Burden ratio remains quite stable, fluctuating narrowly between 0.93 and 0.96 over the entire period. This suggests that the company maintained consistent control over interest expenses relative to its earnings before interest and taxes, reflecting stable financial leverage or interest cost management.

The EBIT Margin experienced a peak at 15.62% in 2021, followed by a gradual decline to 9.03% by 2025. This downward trend suggests a reduction in operating profitability, possibly due to increasing costs, pricing pressures, or changes in product mix affecting margins over time.

Asset Turnover shows a generally positive trend, starting at 1.19 in 2020 and increasing to a peak of 1.36 in 2023, with a slight decrease thereafter. This indicates improving efficiency in using assets to generate revenue, although the slight decline towards the end may signal emerging operational challenges or asset base changes.

Return on Assets (ROA) correlates with the EBIT Margin and Asset Turnover trends. ROA increased sharply from 8.1% in 2020 to highs around 15% in 2021 and 2022, reflecting strong profitability and asset use efficiency. However, it declined to 8.8% by 2025, which aligns with the weakening EBIT Margin and slightly reduced asset turnover, pointing to a reduction in overall asset profitability in recent years.

Tax Burden

Moderate fluctuations with slight improvements in tax efficiency.

Interest Burden

Stable control over interest expenses, reflecting consistent financial management.

EBIT Margin

Declining trend in operating profitability from 2021 onwards.

Asset Turnover

Improved asset efficiency up to 2023, followed by minor decline.

Return on Assets (ROA)

Strong increase through 2021-2022, followed by a decline to 8.8% in 2025, indicating reduced asset profitability.

Tax Burden

The tax burden ratio demonstrates some fluctuations over the observed period, starting at 0.88 in 2020 and reaching a low of 0.82 in 2023 before slightly rebounding to 0.83 in 2025. This indicates a moderately variable effective tax rate affecting the company's profitability after taxes.

Interest Burden

The interest burden ratio remains relatively stable throughout the years, mostly around 0.95 to 0.96, with a slight decline to 0.93 in 2025. This suggests consistent interest expenses relative to earnings before interest and taxes, with a minor improvement in the latest period.

EBIT Margin

The EBIT margin shows a peak in 2021 at 15.62%, after which it generally declines, reaching 9.03% in 2025. The decreasing margin from 2022 onwards indicates diminishing operating profitability, with a significant drop in the most recent year, suggesting increasing costs or decreasing operational efficiency.

Net Profit Margin

The net profit margin parallels the EBIT margin trend, rising to a high of approximately 12.94% in 2022, followed by a downward trend to 6.95% in 2025. This decline implies that despite some recovery in intermediary years, overall profitability after all expenses and taxes has weakened substantially by the end of the period.