Nike Inc. (NYSE:NKE)

The analyzed financial ratios reveal distinct trends in the company's short-term liquidity position over the examined periods. The current ratio demonstrates a generally stable to slightly fluctuating trend, with notable increases during certain quarters followed by gradual declines. Initially, the current ratio decreased from 2.31 to a lower point near 1.9 before experiencing a significant rise peaking at 3.19. After this peak, the ratio moves downward steadily, concluding the period at 2.19. This pattern suggests periodic fluctuations in the firm's ability to cover current liabilities with current assets, with a temporary strengthening occurring midway through the timeline.

The quick ratio, which excludes inventories from current assets, reflects a somewhat similar pattern but remains consistently lower than the current ratio, indicating that a portion of current assets is tied up in inventory. Starting at 1.28, the quick ratio declines to values below 1.0 around early 2020, signaling a reduced buffer to immediately settle short-term obligations. It then increases sharply, reaching a peak of 2.18 before gradually decreasing once more. The reduction following the peak indicates some tightening of liquid resources relative to current liabilities but still staying above the initial values. The trend suggests that while liquid assets improved notably at one point, they have recently declined but remain at a level generally considered satisfactory.

The cash ratio, the most conservative liquidity measure focusing solely on cash and cash equivalents, exhibits more volatility. Initially declining from 0.64 to a low of 0.38, it then undergoes a substantial recovery that pushes the ratio above 1.0 and even up to 1.71 during the middle of the time series. This rise indicates a strong cash position relative to current liabilities at that time. However, a gradual decrease follows, decreasing close to 0.87 toward the latest periods. Despite this decrease, the cash ratio remains near or slightly below 1.0 in recent quarters, suggesting the company generally maintains enough cash to cover nearly all current liabilities but with diminished margins compared to prior peaks.

Overall, the liquidity ratios reflect a cycle of contraction and expansion in short-term financial strength, with a marked improvement around 2020-2021 followed by a moderate decline towards the end of the observed period. The company exhibits a consistently adequate liquidity position, though recent trends point to a slight easing of liquid asset coverage against current obligations.

Current Ratio

Shows periodic increases and decreases, peaking around mid-2021, followed by a gradual downward trend, ending above 2.0.

Quick Ratio

Mirrors the current ratio's direction but remains lower, indicating reliance on inventories; peaks in mid-2021 before declining but staying generally satisfactory.

Cash Ratio

More variable, with a deep initial dip followed by a strong recovery exceeding 1.5, then declining gradually yet retaining a near or slightly below parity position relative to current liabilities.

Current Assets

Current assets display an overall upward trend from August 2018 through May 2021, increasing from approximately $15.5 billion to nearly $26.3 billion. This growth is consistent and relatively steady during this period. There is a peak around November 2021 at approximately $27.2 billion, followed by minor fluctuations but remaining near the same elevated levels through early 2023. From mid-2023 onward, a slight declining trend appears, with current assets decreasing gradually to about $24.6 billion by February 2025.

Current Liabilities

Current liabilities generally increased from about $6.7 billion in August 2018 to approximately $10.7 billion by May 2022, indicating a rise in short-term obligations over this period. There is noticeable volatility beginning mid-2021, with increases and decreases occurring in several quarters. After the May 2022 peak, current liabilities exhibit a gradual decline through mid-2023, reaching roughly $8.5 billion, before rising again toward $11.2 billion by early 2025.

Current Ratio

The current ratio shows a downward movement initially, dropping from 2.31 in August 2018 to about 1.9 by February 2020, signifying a reduction in short-term liquidity during this early period. However, from May 2020, there is a significant improvement, with the ratio climbing sharply to a high of 3.19 by August 2021, reflecting enhanced liquidity possibly due to the substantial increase in current assets relative to current liabilities. This elevated liquidity level stabilizes with some fluctuations until mid-2023. From late 2023 onwards, the current ratio progressively declines to approximately 2.19 by February 2025, indicating a gradual reduction in liquidity ratios, although remaining above the levels observed in early periods.

The analysis of the quarterly financial data reveals several notable trends in liquidity and working capital management over the observed periods.

Total Quick Assets (in US$ millions)

From August 2018 to February 2020, total quick assets fluctuated moderately but generally remained within a range of approximately 7,600 to 8,900 million US dollars. Starting in May 2020, there was a marked and sustained increase in quick assets, peaking at around 18,849 million US dollars in November 2021. This represents a significant expansion of liquid assets over this timeframe. Post-November 2021, total quick assets demonstrated a declining trend, dropping to approximately 14,884 million US dollars by February 2025, indicating a reduction in immediately available assets relative to prior peaks.

Current Liabilities (in US$ millions)

Current liabilities exhibited a generally increasing trend from August 2018 through May 2024. Initially, liabilities rose steadily from about 6,700 million US dollars in August 2018 to over 10,000 million US dollars by May 2024. Notably, there were some fluctuations; for example, current liabilities declined noticeably after November 2021, from around 9,674 million to approximately 8,269 million in August 2021, followed by increases reaching a high of approximately 11,246 million US dollars by November 2024. Towards the final period, there was a slight decrease in current liabilities by February 2025.

Quick Ratio (ratio)

The quick ratio initially declined from 1.28 in August 2018 to its lowest point of around 0.92 in February 2020, indicating that liquidity relative to current liabilities weakened during this time. However, from May 2020 onwards, the quick ratio improved substantially, reaching a peak of 2.18 in August 2021. This increase corresponds with the rise in quick assets during the same period, reflecting stronger short-term liquidity. Post-August 2021, the quick ratio experienced a gradual decline, stabilizing in the range of 1.33 to 1.67 between late 2022 and early 2025, suggesting a normalization of liquidity levels relative to the earlier peak.

In summary, the data indicates that liquidity, as measured by quick assets and quick ratio, deteriorated until early 2020 but subsequently improved significantly into late 2021, likely in response to external conditions or strategic changes. Since then, liquidity has moderated but remains stronger than the pre-2020 levels. Current liabilities have generally increased over the entire period, implying a growing level of short-term obligations that requires monitoring. The observed fluctuations in the quick ratio highlight changes in the company's ability to cover imminent liabilities with liquid assets, reflecting shifts in working capital management and potentially the underlying business environment.

Total Cash Assets

The total cash assets exhibited fluctuations over the analyzed periods with an initial decrease from approximately 4,269 million US dollars in August 2018 to a low of about 3,182 million US dollars in February 2020. There was a significant and abrupt increase to 8,787 million US dollars in May 2020, followed by a steady upward trend peaking at 15,103 million US dollars in November 2021. Subsequently, total cash assets gradually declined, reaching around 8,790 million US dollars by August 2023. The data toward the most recent periods reflects a slight recovery, with total cash assets increasing to 10,393 million US dollars by February 2025.

Current Liabilities

Current liabilities rose steadily from 6,708 million US dollars in August 2018 to a peak of approximately 10,919 million US dollars in August 2022. Post this peak, there was a moderate decrease followed by an increase reaching 11,246 million US dollars by November 2024 before slightly declining to 11,223 million US dollars in February 2025. Overall, current liabilities showed an upward trajectory with some volatility during the latest periods.

Cash Ratio

The cash ratio displayed a general pattern of increase beginning at 0.64 in August 2018, followed by a decrease reaching a low of 0.38 in February 2020. This was succeeded by a substantial rise to a maximum of 1.71 in November 2021, indicating stronger liquidity relative to current liabilities. After this peak, the cash ratio gradually decreased, fluctuating around 1.0 in the most recent periods, with a slight drop below 1.0 noted in November 2024 and February 2025. This trend suggests a temporary strengthening of liquidity followed by a normalization closer to parity between cash assets and current liabilities.

Summary of Trends

The data reveals a significant liquidity enhancement starting in early 2020, likely reflecting strategic cash accumulation or changes in working capital management. This period coincides with rising current liabilities but at a less rapid pace than cash assets initially. However, from late 2021 onward, cash assets decreased while liabilities remained relatively elevated, causing the cash ratio to decline toward levels near or slightly below 1.0. The overall pattern indicates that while the company achieved a strong liquidity position during the mid-term period, recent quarters show a moderation, signaling a return to a more balanced cash coverage of current obligations.