Nike Inc. (NKE)

Profitability Analysis

Difficulty level: Basic

Profitability ratios measure the company's ability to generate profitable sales from its resources (assets).

Ratios (Summary)

Nike Inc., profitability ratios

	May 31, 2014	May 31, 2013	May 31, 2012	May 31, 2011	May 31, 2010	May 31, 2009
Return on Sales
Gross profit margin	44.77%	43.59%	43.40%	45.58%	46.28%	44.87%
Operating profit margin	13.24%	12.86%	12.60%	13.49%	13.01%	9.69%
Net profit margin	9.69%	9.82%	9.21%	10.22%	10.03%	7.75%
Return on Investment
Return on equity (ROE)	24.88%	22.28%	21.41%	21.67%	19.55%	17.11%
Return on assets (ROA)	14.48%	14.13%	14.37%	14.22%	13.23%	11.22%

Source: Based on data from Nike Inc. Annual Reports

Ratio	Description	The company
Gross profit margin	Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures.	Nike Inc.'s gross profit margin improved from 2012 to 2013 and from 2013 to 2014.
Operating profit margin	A profitability ratio calculated as operating income divided by revenue.	Nike Inc.'s operating profit margin improved from 2012 to 2013 and from 2013 to 2014.
Net profit margin	An indicator of profitability, calculated as net income divided by revenue.	Nike Inc.'s net profit margin improved from 2012 to 2013 but then slightly deteriorated from 2013 to 2014.
ROE	A profitability ratio calculated as net income divided by shareholders' equity.	Nike Inc.'s ROE improved from 2012 to 2013 and from 2013 to 2014.
ROA	A profitability ratio calculated as net income divided by total assets.	Nike Inc.'s ROA deteriorated from 2012 to 2013 but then improved from 2013 to 2014 exceeding 2012 level.

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Gross Profit Margin

Nike Inc., gross profit margin calculation

	May 31, 2014	May 31, 2013	May 31, 2012	May 31, 2011	May 31, 2010	May 31, 2009
Selected Financial Data (USD $ in millions)
Gross profit	12,446	11,034	10,471	9,508	8,800	8,604
Revenues	27,799	25,313	24,128	20,862	19,014	19,176
Ratio
Gross profit margin¹	44.77%	43.59%	43.40%	45.58%	46.28%	44.87%

Source: Based on data from Nike Inc. Annual Reports

2014 Calculations

¹ Gross profit margin = 100 × Gross profit ÷ Revenues
= 100 × 12,446 ÷ 27,799 = 44.77%

Ratio	Description	The company
Gross profit margin	Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures.	Nike Inc.'s gross profit margin improved from 2012 to 2013 and from 2013 to 2014.

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Operating Profit Margin

Nike Inc., operating profit margin calculation, comparison to benchmarks

	May 31, 2014	May 31, 2013	May 31, 2012	May 31, 2011	May 31, 2010	May 31, 2009
Selected Financial Data (USD $ in millions)
Operating income	3,680	3,254	3,040	2,815	2,474	1,858
Revenues	27,799	25,313	24,128	20,862	19,014	19,176
Ratio
Operating profit margin¹	13.24%	12.86%	12.60%	13.49%	13.01%	9.69%
Benchmarks
Operating Profit Margin, Industry
Consumer Goods	–%	9.81%	5.15%	9.40%	8.90%	–%

Source: Based on data from Nike Inc. Annual Reports

2014 Calculations

¹ Operating profit margin = 100 × Operating income ÷ Revenues
= 100 × 3,680 ÷ 27,799 = 13.24%

Ratio	Description	The company
Operating profit margin	A profitability ratio calculated as operating income divided by revenue.	Nike Inc.'s operating profit margin improved from 2012 to 2013 and from 2013 to 2014.

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Net Profit Margin

Nike Inc., net profit margin calculation, comparison to benchmarks

	May 31, 2014	May 31, 2013	May 31, 2012	May 31, 2011	May 31, 2010	May 31, 2009
Selected Financial Data (USD $ in millions)
Net income	2,693	2,485	2,223	2,133	1,907	1,487
Revenues	27,799	25,313	24,128	20,862	19,014	19,176
Ratio
Net profit margin¹	9.69%	9.82%	9.21%	10.22%	10.03%	7.75%
Benchmarks
Net Profit Margin, Industry
Consumer Goods	–%	7.61%	6.77%	8.79%	7.65%	–%

Source: Based on data from Nike Inc. Annual Reports

2014 Calculations

¹ Net profit margin = 100 × Net income ÷ Revenues
= 100 × 2,693 ÷ 27,799 = 9.69%

Ratio	Description	The company
Net profit margin	An indicator of profitability, calculated as net income divided by revenue.	Nike Inc.'s net profit margin improved from 2012 to 2013 but then slightly deteriorated from 2013 to 2014.

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Return on Equity (ROE)

Nike Inc., ROE calculation, comparison to benchmarks

	May 31, 2014	May 31, 2013	May 31, 2012	May 31, 2011	May 31, 2010	May 31, 2009
Selected Financial Data (USD $ in millions)
Net income	2,693	2,485	2,223	2,133	1,907	1,487
Total shareholders' equity	10,824	11,156	10,381	9,843	9,754	8,693
Ratio
ROE¹	24.88%	22.28%	21.41%	21.67%	19.55%	17.11%
Benchmarks
ROE, Industry
Consumer Goods	–%	18.24%	16.51%	21.68%	18.72%	–%

Source: Based on data from Nike Inc. Annual Reports

2014 Calculations

¹ ROE = 100 × Net income ÷ Total shareholders' equity
= 100 × 2,693 ÷ 10,824 = 24.88%

Ratio	Description	The company
ROE	A profitability ratio calculated as net income divided by shareholders' equity.	Nike Inc.'s ROE improved from 2012 to 2013 and from 2013 to 2014.

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Return on Assets (ROA)

Nike Inc., ROA calculation, comparison to benchmarks

	May 31, 2014	May 31, 2013	May 31, 2012	May 31, 2011	May 31, 2010	May 31, 2009
Selected Financial Data (USD $ in millions)
Net income	2,693	2,485	2,223	2,133	1,907	1,487
Total assets	18,594	17,584	15,465	14,998	14,419	13,250
Ratio
ROA¹	14.48%	14.13%	14.37%	14.22%	13.23%	11.22%
Benchmarks
ROA, Industry
Consumer Goods	–%	5.63%	4.99%	6.75%	5.66%	–%

Source: Based on data from Nike Inc. Annual Reports

2014 Calculations

¹ ROA = 100 × Net income ÷ Total assets
= 100 × 2,693 ÷ 18,594 = 14.48%

Ratio	Description	The company
ROA	A profitability ratio calculated as net income divided by total assets.	Nike Inc.'s ROA deteriorated from 2012 to 2013 but then improved from 2013 to 2014 exceeding 2012 level.

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