Nike Inc. (NYSE:NKE)

Debt to Equity Ratios

The debt to equity ratio experienced a significant increase from 0.38 in 2019 to a peak of 1.2 in 2020, indicating a higher reliance on debt relative to equity during that period. Following this peak, the ratio steadily declined over the subsequent years, stabilizing around 0.62 by 2024. When including operating lease liabilities, the ratio follows a similar trend but remains consistently higher, peaking at 1.62 in 2020 and decreasing to 0.83 by 2024.

Debt to Capital Ratios

This ratio showed an increase from 0.28 in 2019 to 0.55 in 2020, reflecting increased leverage, similar to the debt to equity trend. Subsequently, the ratio decreased gradually, settling around 0.38 in 2024. Including operating lease liabilities, the debt to capital ratio also peaked in 2020 at 0.62 and declined to 0.45 by 2024.

Debt to Assets Ratios

The debt to assets ratio doubled from 0.15 in 2019 to 0.31 in 2020, signaling increased use of debt relative to total assets. This ratio then decreased slightly in the following years, maintaining a stable level around 0.23 by 2024. When operating leases are taken into account, the ratio increased to 0.42 in 2020 and decreased to 0.31 by 2024. This suggests that lease obligations form a material part of total debt.

Financial Leverage

Financial leverage rose markedly from 2.62 in 2019 to 3.89 in 2020, reflecting greater debt financing relative to equity. Thereafter, it declined steadily to roughly 2.64 by 2024, indicating a return to lower leverage levels in more recent years.

Interest Coverage Ratio

The interest coverage ratio fell sharply from 37.65 in 2019 to 20.12 in 2020, indicating a reduced ability to cover interest expenses with operating income during that year. However, this ratio gradually improved in subsequent years, reaching 25.91 by 2024, signaling strengthened capacity to meet interest obligations.

Fixed Charge Coverage Ratio

The fixed charge coverage ratio declined from 6.00 in 2019 to 5.01 in 2020 but subsequently demonstrated a positive trend, increasing to approximately 8.55 by 2024. This progression indicates improving coverage of fixed financial obligations over the later periods.

Total Debt

The total debt displayed a significant increase from 3,479 million USD in 2019 to 9,657 million USD in 2020. After this peak, the debt level stabilized and slightly decreased in the subsequent years, remaining around the 8,900 to 9,400 million USD range through 2024. This indicates an initial aggressive leveraging or financing activity followed by a period of relative stability.

Shareholders’ Equity

Shareholders’ equity decreased from 9,040 million USD in 2019 to 8,055 million USD in 2020, marking a decline concurrent with the rise in debt. However, from 2021 onwards, equity showed a consistent upward trend, rising to 12,767 million USD and continuing to increase each year, reaching 14,430 million USD in 2024. This suggests improved profitability, retained earnings, or capital injections after 2020.

Debt to Equity Ratio

The debt to equity ratio followed a pattern consistent with changes in debt and equity. It sharply increased from 0.38 in 2019 to a peak of 1.2 in 2020, reflecting higher leverage and lower equity. From 2021, the ratio steadily declined to 0.62 in 2024, indicating a reduction in financial risk and an improved capital structure as equity grew and debt slightly decreased or stabilized.

Total Debt (including operating lease liability)

The total debt experienced a significant increase from 3,479 million USD in 2019 to 13,015 million USD in 2020. Following this peak, the total debt slightly decreased over the subsequent years, reaching 11,952 million USD by 2024. This indicates a substantial rise in leverage in 2020, with a gradual reduction thereafter.

Shareholders’ Equity

Shareholders' equity demonstrated some fluctuations during the period. It decreased from 9,040 million USD in 2019 to 8,055 million USD in 2020, followed by a strong recovery to 12,767 million USD in 2021. The equity further increased to 15,281 million USD in 2022, before showing a slight decline to 14,004 million USD in 2023 and a modest rise to 14,430 million USD in 2024. Overall, the equity values indicate growth after the dip experienced in 2020.

Debt to Equity Ratio (including operating lease liability)

The debt to equity ratio rose sharply from 0.38 in 2019 to 1.62 in 2020, in line with the increase in total debt and decline in equity that year. Subsequently, the ratio decreased progressively to 1.00 in 2021, then to 0.83 in 2022, slightly increased to 0.87 in 2023, and again declined to 0.83 in 2024. This trend reflects a move towards a more balanced capital structure following the elevated leverage in 2020.

Summary

The data reveals a significant spike in debt levels in 2020, accompanied by reduced shareholders’ equity, leading to a peak in the debt to equity ratio. In the subsequent years, there has been a deliberate reduction in debt levels and a recovery in equity, resulting in a decrease in leverage and an improved financial position. The company appears to have managed its capital structure actively to restore a healthier balance between debt and equity after the 2020 spike.

Total Debt

The total debt experienced a substantial increase from 2019 to 2020, rising sharply from $3,479 million to $9,657 million. After this spike, the debt levels slightly decreased in subsequent years, stabilizing around $8,900 million by 2024. This indicates that the company took on significant debt in 2020 but managed to reduce it moderately thereafter, maintaining a relatively steady amount in the later years.

Total Capital

Total capital showed a consistent upward trend over the entire period, increasing from $12,519 million in 2019 to a peak of $24,711 million in 2022. After reaching this peak, total capital decreased somewhat in 2023 but edged slightly up again in 2024, ending at $23,339 million. Overall, the company’s capital base more than doubled over the span of these six years, indicating growth in its financial resources or equity.

Debt to Capital Ratio

The debt to capital ratio mirrored the trend observed in total debt. It increased sharply from 0.28 in 2019 to 0.55 in 2020, reflecting the increased leverage due to the jump in debt. Following 2020, the ratio declined gradually and stabilized around 0.38 in the most recent years. This suggests that while the company’s leverage increased significantly in 2020, it has since taken measures to reduce dependence on debt relative to its total capital, achieving a more balanced capital structure.

Total debt (including operating lease liability)

The total debt experienced a significant increase from May 31, 2019 to May 31, 2020, rising sharply from 3,479 million USD to 13,015 million USD. Following this peak, the debt level displayed a gradual decline over the subsequent years, ending at 11,952 million USD by May 31, 2024. This indicates an initial surge in leverage, possibly for expansion or restructuring, with a focus on reducing debt levels in the later periods.

Total capital (including operating lease liability)

Total capital showed a consistent upward trajectory throughout the period analyzed. It increased from 12,519 million USD in 2019 to a peak of 27,908 million USD in 2022. Despite a slight decrease in 2023 to 26,148 million USD, total capital edged slightly up to 26,382 million USD by 2024. This steady growth suggests ongoing investments and capitalization efforts maintaining a strong capital base.

Debt to capital (including operating lease liability)

The debt to capital ratio rose substantially from 0.28 in 2019 to a high of 0.62 in 2020, reflecting the sharp increase in debt relative to capital. After 2020, the ratio declined, stabilizing around the mid-0.40 range from 2021 onward, reaching 0.45 by 2024. This pattern indicates initial increased financial leverage followed by deleveraging and a more balanced capital structure in recent periods.

Total Debt

Over the six-year period, total debt exhibited a significant increase from 3,479 million USD in 2019 to a peak around 9,657 million USD in 2020, indicating a substantial rise in leverage or borrowing. Subsequently, the total debt slightly declined and then stabilized in the range of approximately 8,900 to 9,400 million USD from 2021 through 2024, suggesting a maintained level of financial obligations with minor fluctuations.

Total Assets

Total assets demonstrated consistent growth from 23,717 million USD in 2019 to a high point of 40,321 million USD in 2022. Following this peak, total assets experienced a decrease in 2023 to around 37,531 million USD, but showed a slight recovery by 2024 reaching 38,110 million USD. This trend reflects an overall expansion in asset base, albeit with some volatility in the later years.

Debt to Assets Ratio

The debt to assets ratio increased notably from 0.15 in 2019 to 0.31 in 2020, coinciding with the sharp rise in total debt, indicating a higher proportion of liabilities relative to assets. After 2020, the ratio declined and stabilized between 0.23 and 0.25 through 2024, suggesting an improvement in financial structure with reduced leverage relative to the asset base, despite the elevated level of total debt.

Overall Analysis

The company underwent a significant increase in debt around 2020, likely reflecting strategic financing decisions or external factors requiring increased borrowing. Concurrently, asset growth supported higher leverage levels initially, but the subsequent ratios indicate efforts to manage debt levels prudently relative to assets. The stabilization of both total debt and the debt to assets ratio in recent years points to a more controlled financial position. Minor asset fluctuations in the last two years suggest some operational or investment variability but do not indicate volatility at a critical level.

Total Debt (including operating lease liability)

The total debt experienced a marked increase from 2019 to 2020, rising sharply from 3,479 million US dollars to 13,015 million US dollars. After this significant jump, the debt levels stabilized and gradually declined over the subsequent years, decreasing slightly each year from 12,813 million US dollars in 2021 to 11,952 million US dollars in 2024.

Total Assets

Total assets showed a consistent upward trajectory from 2019 through 2022, growing from 23,717 million US dollars to 40,321 million US dollars. There was a decline in 2023 to 37,531 million US dollars, followed by a slight recovery to 38,110 million US dollars in 2024. Overall, assets expanded significantly over the six-year period despite a minor contraction in the later years.

Debt to Assets Ratio (including operating lease liability)

The debt to assets ratio increased substantially from 0.15 in 2019 to 0.42 in 2020, reflecting the substantial rise in debt relative to assets during this period. After this peak, the ratio declined steadily to 0.34 in 2021 and continued to decrease marginally through subsequent years, settling around 0.31 in 2024. This indicates a gradual improvement in leverage and a return to a more conservative capital structure post-2020 spike.

Overall Analysis

The financial data reveals a period of increased leverage in 2020, with debt levels rising abruptly and exceeding 40% of total assets. This was followed by a phase of debt reduction and asset growth stabilization. The decline in the debt to assets ratio after 2020 is indicative of efforts to manage indebtedness relative to asset base, potentially signaling improved financial stability and risk management. The overall asset base has grown significantly since 2019, notwithstanding a slight dip in 2023, implying sustained investment or accumulation of resources during the period.

Total assets

Total assets showed a consistent upward trend from May 31, 2019, to May 31, 2022, increasing substantially from 23,717 million USD to 40,321 million USD. This represents notable asset growth over the three years. However, in the subsequent two years, total assets declined slightly to 37,531 million USD by May 31, 2023, before marginally increasing again to 38,110 million USD in the most recent period. Overall, the data reflects an overall expansion of asset base, followed by some stabilization and minor fluctuations in the last couple of years.

Shareholders’ equity

Shareholders' equity experienced some variability over the analyzed period. It initially decreased from 9,040 million USD in May 2019 to 8,055 million USD in May 2020, indicating a reduction in net equity during that year. Subsequently, equity increased substantially to 12,767 million USD in May 2021 and continued rising to a peak of 15,281 million USD in May 2022. In the last two years, shareholders’ equity declined modestly to 14,004 million USD in 2023 and then rose to 14,430 million USD by May 2024. This trend suggests recovery and strengthening equity after an initial dip, followed by some moderation in the equity growth rate.

Financial leverage

Financial leverage, expressed as a ratio, showed notable fluctuations over the period. It rose sharply from 2.62 in May 2019 to a peak of 3.89 in May 2020, reflecting an increase in the use of debt relative to equity. After this peak, financial leverage declined steadily to 2.96 in May 2021 and further to 2.64 in May 2022, indicating a reduction in leverage and possibly a strengthening of the equity base relative to liabilities. The ratio remained relatively stable after this point, hovering slightly above 2.6 through May 2024. This pattern suggests strategic deleveraging following a period of heightened financial risk.

The financial data reflects a dynamic trend in the company's earnings before interest and tax (EBIT) over the period analyzed. After a decline from 4,932 million USD in May 2019 to 3,038 million USD in May 2020, the EBIT exhibited a substantial recovery and growth, reaching a peak of 6,957 million USD in May 2021. The figures then stabilized, maintaining levels around 6,950 million USD and above through May 2024, showing resilience and strong operational profitability after the initial downturn.

Interest expense showed an upward trajectory from 131 million USD in May 2019 to 299 million USD in May 2022, which represents more than a doubling over this period. However, from May 2022 through May 2024, interest expenses marginally decreased, ending at 269 million USD. This fluctuation could indicate possible adjustments in the company's debt structure or cost of borrowing over the years.

The interest coverage ratio, which measures the ability to meet interest obligations from operating earnings, sharply decreased from 37.65 in May 2019 to 20.12 in May 2020, indicating a reduction in the margin of safety for interest payments at that point. Subsequently, this ratio improved and stabilized between approximately 22 and 26 from May 2021 to May 2024. This suggests improved efficiency and a stronger capacity to cover interest expenses through operational earnings despite rising interest costs.

Summary of Key Trends:

1. Earnings before interest and tax (EBIT) experienced a significant dip in 2020, followed by a robust recovery and sustained high profitability through 2024.

2. Interest expense increased considerably until 2022 but has slightly decreased thereafter, possibly reflecting shifts in debt management or interest rates.

3. The interest coverage ratio fell sharply in 2020, indicating pressure on interest payment capacity, but subsequently improved and remained stable, reflecting enhanced operational earnings relative to interest costs.

The financial data over the six-year period reveals notable fluctuations and trends in earnings before fixed charges and tax, fixed charges, and the fixed charge coverage ratio.

Earnings before fixed charges and tax

This item experienced a significant decline from 5,761 million US dollars in 2019 to 3,607 million in 2020, reflecting a substantial reduction likely associated with external economic or operational challenges. However, a strong rebound is observed in 2021, with earnings increasing markedly to 7,546 million US dollars. Following this recovery, earnings remained relatively stable around the 7,000 million mark, with slight variations: 7,543 million in 2022, a dip to 7,077 million in 2023, and a subsequent rise to 7,587 million in 2024. This pattern suggests resilience and recovery in core earnings despite some volatility.

Fixed charges

Fixed charges have shown a generally stable pattern over the period with minor fluctuations. They decreased from 960 million in 2019 to 720 million in 2020, which aligns with the earnings decline during the same period. Thereafter, fixed charges gradually increased to 885 million in 2021, followed by a marginal rise to 892 million in 2022, then a slight decrease to 876 million in 2023, and a small increase again to 887 million in 2024. These relatively consistent fixed charges indicate controlled fixed financial obligations despite changing earnings.

Fixed charge coverage ratio

The coverage ratio, indicating the ability to cover fixed charges with earnings before fixed charges and tax, mirrors the earnings trend but highlights overall improving financial strength. The ratio decreased from 6 in 2019 to 5.01 in 2020, reflecting the impact of decreased earnings. It then improved considerably, reaching 8.53 in 2021, stabilizing close to that level with a value of 8.46 in 2022. A slight decline to 8.08 occurred in 2023, followed by an improvement to 8.55 in 2024, surpassing the 2019 level. This progression suggests that the company has enhanced its ability to meet fixed charges over time, demonstrating improved financial stability and coverage capacity.