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, 2015 May 31, 2014 May 31, 2013 May 31, 2012 May 31, 2011 May 31, 2010
Return on Sales
Gross profit margin 45.97% 44.77% 43.59% 43.40% 45.58% 46.28%
Operating profit margin 13.64% 13.24% 12.86% 12.60% 13.49% 13.01%
Net profit margin 10.70% 9.69% 9.82% 9.21% 10.22% 10.03%
Return on Investment
Return on equity (ROE) 25.76% 24.88% 22.28% 21.41% 21.67% 19.55%
Return on assets (ROA) 15.15% 14.48% 14.13% 14.37% 14.22% 13.23%

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 2013 to 2014 and from 2014 to 2015.
Operating profit margin A profitability ratio calculated as operating income divided by revenue. Nike Inc.'s operating profit margin improved from 2013 to 2014 and from 2014 to 2015.
Net profit margin An indicator of profitability, calculated as net income divided by revenue. Nike Inc.'s net profit margin deteriorated from 2013 to 2014 but then improved from 2014 to 2015 exceeding 2013 level.
ROE A profitability ratio calculated as net income divided by shareholders' equity. Nike Inc.'s ROE improved from 2013 to 2014 and from 2014 to 2015.
ROA A profitability ratio calculated as net income divided by total assets. Nike Inc.'s ROA improved from 2013 to 2014 and from 2014 to 2015.

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Gross Profit Margin

Nike Inc., gross profit margin calculation

 
May 31, 2015 May 31, 2014 May 31, 2013 May 31, 2012 May 31, 2011 May 31, 2010
Selected Financial Data (USD $ in millions)
Gross profit 14,067  12,446  11,034  10,471  9,508  8,800 
Revenues 30,601  27,799  25,313  24,128  20,862  19,014 
Ratio
Gross profit margin1 45.97% 44.77% 43.59% 43.40% 45.58% 46.28%

Source: Based on data from Nike Inc. Annual Reports

2015 Calculations

1 Gross profit margin = 100 × Gross profit ÷ Revenues
= 100 × 14,067 ÷ 30,601 = 45.97%

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 2013 to 2014 and from 2014 to 2015.

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Operating Profit Margin

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

 
May 31, 2015 May 31, 2014 May 31, 2013 May 31, 2012 May 31, 2011 May 31, 2010
Selected Financial Data (USD $ in millions)
Operating income 4,175  3,680  3,254  3,040  2,815  2,474 
Revenues 30,601  27,799  25,313  24,128  20,862  19,014 
Ratio
Operating profit margin1 13.64% 13.24% 12.86% 12.60% 13.49% 13.01%
Benchmarks
Operating Profit Margin, Industry
Consumer Goods –% 9.90% 10.19% 5.45% 9.60% 9.19%

Source: Based on data from Nike Inc. Annual Reports

2015 Calculations

1 Operating profit margin = 100 × Operating income ÷ Revenues
= 100 × 4,175 ÷ 30,601 = 13.64%

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 2013 to 2014 and from 2014 to 2015.

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Net Profit Margin

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

 
May 31, 2015 May 31, 2014 May 31, 2013 May 31, 2012 May 31, 2011 May 31, 2010
Selected Financial Data (USD $ in millions)
Net income 3,273  2,693  2,485  2,223  2,133  1,907 
Revenues 30,601  27,799  25,313  24,128  20,862  19,014 
Ratio
Net profit margin1 10.70% 9.69% 9.82% 9.21% 10.22% 10.03%
Benchmarks
Net Profit Margin, Industry
Consumer Goods –% 7.43% 7.73% 6.81% 8.79% 7.65%

Source: Based on data from Nike Inc. Annual Reports

2015 Calculations

1 Net profit margin = 100 × Net income ÷ Revenues
= 100 × 3,273 ÷ 30,601 = 10.70%

Ratio Description The company
Net profit margin An indicator of profitability, calculated as net income divided by revenue. Nike Inc.'s net profit margin deteriorated from 2013 to 2014 but then improved from 2014 to 2015 exceeding 2013 level.

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Return on Equity (ROE)

Nike Inc., ROE calculation, comparison to benchmarks

 
May 31, 2015 May 31, 2014 May 31, 2013 May 31, 2012 May 31, 2011 May 31, 2010
Selected Financial Data (USD $ in millions)
Net income 3,273  2,693  2,485  2,223  2,133  1,907 
Total shareholders' equity 12,707  10,824  11,156  10,381  9,843  9,754 
Ratio
ROE1 25.76% 24.88% 22.28% 21.41% 21.67% 19.55%
Benchmarks
ROE, Industry
Consumer Goods –% 19.27% 18.64% 16.76% 21.68% 18.72%

Source: Based on data from Nike Inc. Annual Reports

2015 Calculations

1 ROE = 100 × Net income ÷ Total shareholders' equity
= 100 × 3,273 ÷ 12,707 = 25.76%

Ratio Description The company
ROE A profitability ratio calculated as net income divided by shareholders' equity. Nike Inc.'s ROE improved from 2013 to 2014 and from 2014 to 2015.

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Return on Assets (ROA)

Nike Inc., ROA calculation, comparison to benchmarks

 
May 31, 2015 May 31, 2014 May 31, 2013 May 31, 2012 May 31, 2011 May 31, 2010
Selected Financial Data (USD $ in millions)
Net income 3,273  2,693  2,485  2,223  2,133  1,907 
Total assets 21,600  18,594  17,584  15,465  14,998  14,419 
Ratio
ROA1 15.15% 14.48% 14.13% 14.37% 14.22% 13.23%
Benchmarks
ROA, Industry
Consumer Goods –% 5.45% 5.73% 5.03% 6.75% 5.66%

Source: Based on data from Nike Inc. Annual Reports

2015 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 3,273 ÷ 21,600 = 15.15%

Ratio Description The company
ROA A profitability ratio calculated as net income divided by total assets. Nike Inc.'s ROA improved from 2013 to 2014 and from 2014 to 2015.

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