Nike Inc. (NYSE:NKE)

The financial ratios over the analyzed period exhibit notable trends in liquidity management. The current ratio started at 2.48 in May 2020 and showed a progressive increase, reaching its peak of 2.72 in both May 2021 and May 2023. However, in the subsequent years, it declined to 2.4 in May 2024 and further to 2.21 in May 2025. This indicates a slight reduction in the company's ability to cover short-term liabilities with current assets towards the end of the period.

The quick ratio followed a somewhat similar pattern but with a more pronounced fluctuation. Beginning at 1.39 in May 2020, it rose significantly to 1.85 in May 2021, suggesting improved liquidity excluding inventories. Afterward, it decreased to 1.65 in May 2022 and continued a gradual decline to 1.6 in May 2023, then to 1.51 in May 2024, and further slipped to 1.31 by May 2025. The declining quick ratio towards the end may point to tighter liquidity conditions when considering only the most liquid assets.

The cash ratio experienced an initial growth from 1.06 in May 2020 to 1.39 in May 2021, reflecting an increase in the company's most liquid assets relative to its current liabilities. Following this peak, the ratio consistently decreased each year to 1.21 in May 2022, 1.15 in May 2023, 1.09 in May 2024, and finally to 0.87 in May 2025. The downward trend suggests a reduction in cash and cash equivalents relative to current liabilities, which may raise concerns about immediate liquidity reserves.

Overall, the liquidity ratios reveal that the company experienced an improvement in short-term financial strength in the early part of the period, particularly in May 2021, followed by a gradual decline in liquidity across all ratios up to May 2025. This trend may warrant closer monitoring to ensure that the company maintains sufficient capacity to meet its short-term obligations moving forward.

The annual financial data reveals several trends in the company's liquidity and short-term financial position from 2020 to 2025.

Current Assets

Current assets showed an overall increasing trend from 2020 through 2022, rising from 20,556 million USD to 28,213 million USD. In 2023, current assets declined to 25,202 million USD and remained relatively stable around 25,382 million USD in 2024 before decreasing again to 23,362 million USD in 2025. This indicates some volatility with a peak in 2022 followed by a gradual reduction over the subsequent years.

Current Liabilities

Current liabilities exhibited a general upward trajectory over the six years. Starting at 8,284 million USD in 2020, liabilities increased each year until 2022, peaking at 10,730 million USD. This was followed by a drop to 9,256 million USD in 2023. However, the figures climbed again to approximately 10,593 million USD in 2024 and slightly decreased to 10,566 million USD in 2025. Despite minor fluctuations, liabilities remained elevated after 2021, suggesting consistent short-term obligations.

Current Ratio

The current ratio, which measures short-term liquidity by comparing current assets to current liabilities, was highest in 2021 and 2023 at 2.72, indicating strong liquidity during those years. After peaking, the ratio decreased to 2.4 in 2024 and further declined to 2.21 in 2025. While the ratio has remained above 2.0, denoting reasonably healthy liquidity, the downward trend in later years points to a gradual tightening of short-term financial flexibility.

In summary, the company demonstrated growth in current assets and liabilities up to 2022, followed by some reduction and stabilization in assets, whereas liabilities remained relatively high. The current ratio indicates decreasing, although still adequate, liquidity in recent years. The observed patterns suggest cautious monitoring of working capital management could be beneficial to maintain the company's financial stability.

Total Quick Assets

The total quick assets increased significantly from 11,536 million USD in 2020 to a peak of 17,939 million USD in 2021. After this peak, the amount declined slightly to 17,664 million USD in 2022, followed by a more pronounced decrease to 14,806 million USD in 2023. There was a modest recovery to 16,009 million USD in 2024, but this was followed by another decline to 13,868 million USD in 2025. Overall, the trend shows volatility with a general decline after reaching a high point in 2021.

Current Liabilities

Current liabilities demonstrated an upward trajectory from 8,284 million USD in 2020 to 10,730 million USD in 2022. This was followed by a decrease to 9,256 million USD in 2023. However, the liabilities rose again to 10,593 million USD in 2024 and remained almost stable at 10,566 million USD in 2025. This indicates a general increase in current liabilities over the period, with a brief dip in 2023.

Quick Ratio

The quick ratio, which measures the company's short-term liquidity, improved from 1.39 in 2020 to 1.85 in 2021, reflecting increased liquidity strength. It then decreased gradually each year from 1.85 in 2021 to 1.65 in 2022, 1.60 in 2023, 1.51 in 2024, and finally 1.31 in 2025. This steady decline suggests a weakening in liquidity position over the latter years of the period analyzed.

The financial data reveals several trends regarding liquidity and short-term financial stability.

Total cash assets

This metric showed an increase from 8,787 million USD in 2020 to a peak of 13,476 million USD in 2021, indicating a significant improvement in the company's cash reserves. However, after 2021, total cash assets declined gradually through to 2025, reaching 9,151 million USD, which is closer to the initial 2020 level. This suggests that cash holdings have been somewhat reduced over the latter periods.

Current liabilities

Current liabilities increased from 8,284 million USD in 2020 to 10,730 million USD in 2022, showing a trend of rising short-term obligations. There was a decrease in 2023 to 9,256 million USD, followed by a subsequent increase to approximately 10,566 million USD by 2025. Overall, current liabilities have increased over the time span, peaking around 2022 and 2024-2025 periods.

Cash ratio

The cash ratio, which measures the company’s ability to cover current liabilities with cash or cash equivalents, rose from 1.06 in 2020 to a high of 1.39 in 2021. It then declined steadily in the following years, dropping to 0.87 by 2025. This decrease below 1 indicates a potential weakening in liquidity, as cash assets are no longer sufficient to cover all current liabilities fully by the end of the period analyzed.

In summary, the company experienced an initial strengthening in cash assets and liquidity in 2021 but has seen a gradual decline since then. Despite fluctuations in current liabilities, their overall rise combined with shrinking cash reserves led to a declining cash ratio, reflecting reduced short-term financial resilience by 2025.