Nike Inc. (NYSE:NKE)

The analysis of liquidity ratios over the reported periods reveals noteworthy trends in the company's short-term financial health and operational efficiency.

Current ratio

The current ratio experienced an overall increasing trend from August 2019 through November 2021, rising from 2.01 to a peak of 3.19 in August 2021. This indicates an improvement in the company’s ability to cover short-term liabilities with short-term assets. Afterward, a downward correction took place, with the ratio declining to about 2.19 by May 2025. Despite this decline, the ratio remained above 2.0 in the majority of the periods, suggesting a generally strong liquidity position throughout the timeline.

Quick ratio

The quick ratio followed a similar pattern with an initial rise from 1.03 in August 2019 to a high of 2.18 in August 2021, reflecting improved immediate liquidity excluding inventories. From that point, the ratio gradually decreased to 1.31 by May 2025. This decline indicates a relative increase in current liabilities or a reduction of highly liquid assets over the latter periods, yet the ratio stayed consistently above 1.0 after February 2020, demonstrating acceptable quick liquidity.

Cash ratio

The cash ratio showed the most notable variability. Starting from a moderate level of 0.45 in August 2019, it sharply increased to over 1.0 in May 2020 and peaked at 1.71 in November 2021, suggesting a significant buildup of cash and cash equivalents relative to current liabilities during that time. Subsequent periods show a declining trend down to 0.87 in May 2025, indicating a reduction in cash holdings or an increase in current liabilities. However, the cash ratio remaining near or above 1.0 for several quarters suggests a solid cash position during the mid-period of observation.

In summary, the data indicate that liquidity improved substantially up to late 2021, driven by increases across all liquidity measures, particularly emphasizing stronger current assets coverage and cash reserves. The downward trends thereafter suggest a return to more moderate liquidity levels but still maintain solid short-term financial stability. These trends could reflect strategic shifts in working capital management or operational changes in response to evolving market conditions.

The analysis of the quarterly financial data reveals several notable trends in the company's liquidity position over the observed periods.

Current Assets

Current assets showed an overall upward trend from August 2019 to May 2022, increasing from 16,228 million US dollars to a peak of 28,213 million US dollars. Following this peak, there was a gradual decline through subsequent quarters, ending at 23,362 million US dollars in May 2025. This pattern indicates an initial strong accumulation of liquid and short-term assets, followed by a gradual reduction in the asset base in later periods.

Current Liabilities

Current liabilities grew steadily from 8,070 million US dollars in August 2019 to a high of 11,246 million US dollars in November 2024, with some fluctuations in between. The liabilities experienced fluctuations but generally trended upward, implying that short-term obligations increased over the timeframe, albeit with intermittent decreases in some quarters.

Current Ratio

The current ratio fluctuated within a range of approximately 1.9 to 3.19. Initially, it declined slightly from 2.01 in August 2019 to 1.90 in February 2020 but rose sharply to a high of 3.19 in August 2021, suggesting a strengthening liquidity position during that period. Subsequently, the ratio mostly stabilized between 2.2 and 2.9, exhibiting a gradual decline towards the later quarters, ending near 2.21 in May 2025. This indicates that while the company maintained a healthy liquidity buffer, its relative short-term liquidity slightly diminished towards the end of the timeline.

In summary, the company demonstrated robust growth in current assets and a corresponding increase in current liabilities over the observed periods. The liquidity, as represented by the current ratio, improved notably until mid-2021 and then showed a modest decreasing trend, indicating a cautious management of working capital with some tightening of short-term liquidity in recent quarters.

Total Quick Assets

The total quick assets display a generally upward trend from August 31, 2019, through May 31, 2021, rising from approximately 8,300 million USD to nearly 17,939 million USD. This period shows significant growth, particularly between February 29, 2020, and May 31, 2020, where a sharp increase occurred from 7,655 million USD to 11,536 million USD, suggesting a strategic increase in highly liquid assets. After peaking around late 2021 at approximately 18,849 million USD, the total quick assets show a gradual decline through mid-2025, dropping to approximately 13,868 million USD by May 31, 2025. This downward trend towards the later periods indicates a possible reduction in readily available liquid resources.

Current Liabilities

Current liabilities remain relatively stable with minor fluctuations throughout the observed periods. They start around 8,070 million USD in August 2019, showing a slight increase and peaking intermittently above 11,200 million USD by late 2024. Notably, there is a rise from 8,818 million USD in February 2022 to a peak of 11,246 million USD by November 2024. A modest reduction occurs afterward, falling to 10,566 million USD by May 2025. Overall, the liabilities exhibit a slow but steady increase over time, indicating growing short-term obligations.

Quick Ratio

The quick ratio reflects the liquidity position relative to current liabilities. From August 2019 to May 2021, this ratio shows a significant improvement, rising from approximately 1.03 to 1.85. This suggests enhanced short-term financial health and the ability to cover current liabilities with quick assets. After peaking around August 2021 at 2.18, the quick ratio gradually declines through the subsequent periods, reaching about 1.31 by May 2025. Despite this decrease, the ratio remains above 1.0, indicating that quick assets continue to exceed current liabilities, though with diminishing conservatism in liquidity management.

Overall Insights

The initial period from 2019 through mid-2021 is characterized by strengthening liquidity, with quick assets growing at a faster pace than current liabilities, resulting in improved quick ratios. This indicates a conservative liquidity management approach, potentially reflective of strategic positioning in response to economic conditions during that time. From late 2021 onwards, a reversal is observed where quick assets decline while current liabilities rise, leading to a diminishing quick ratio. This trend may imply increasing short-term financial pressure or a strategic shift towards less liquid asset holdings. However, the quick ratio remaining above 1 throughout suggests ongoing, albeit reduced, capability to meet short-term obligations promptly.

The financial data reveals several noteworthy trends regarding liquidity and cash management over the analyzed periods.

Total Cash Assets

The total cash assets exhibited initial volatility, with a decline from US$3,644 million in August 2019 to US$3,182 million in February 2020. Thereafter, a significant increase was observed in May 2020, reaching US$8,787 million, peaking even higher at US$15,103 million in November 2021. Following this peak, a gradual decline occurred through to May 2023, with cash assets falling to approximately US$10,675 million. Afterward, a further decrease is seen, ending at US$9,151 million by May 2025. This pattern suggests a substantial accumulation of cash starting mid-2020, likely as a strategic response to external conditions, followed by a cautious reduction in cash holdings in later periods.

Current Liabilities

Current liabilities showed a general upward trend from US$8,070 million in August 2019 to US$11,246 million in November 2024, peaking at several points along the timeline. The levels fluctuated moderately within a range, for example rising to US$10,919 million in August 2022 and reaching US$11,246 million around November 2024 before slightly tapering off towards May 2025. This steady increase in current liabilities indicates growing short-term obligations, which may reflect increased operational activities or short-term financing.

Cash Ratio

The cash ratio exhibited a pronounced shift over the periods. Initially below 0.5 in late 2019 and early 2020, the ratio surged above 1.0 starting May 2020, peaking at 1.71 in November 2021. This indicates a period of strong liquidity, where cash assets surpassed current liabilities, suggesting a conservative liquidity position. From late 2021 onwards, the ratio gradually declined, dipping below 1.0 by November 2024 and remaining under this threshold through May 2025. The declining cash ratio in the latter periods reflects a reduction in cash buffer relative to short-term debts, implying a shift towards a less liquid but possibly more efficient use of resources.

Overall, the data portrays a strategic build-up of cash reserves coinciding with increased current liabilities until late 2021, followed by a gradual adjustment to a lower liquidity position over recent periods. This evolution may indicate changing financial strategies, possibly influenced by market conditions or operational requirements, balancing liquidity adequacy against capital deployment.