Short-term (Operating) Activity Analysis

Difficulty level: Basic


Ratios (Summary)

Nike Inc., short-term (operating) activity ratios

 
May 31, 2015 May 31, 2014 May 31, 2013 May 31, 2012 May 31, 2011 May 31, 2010
Turnover Ratios
Inventory turnover 3.81 3.89 4.16 4.08 4.18 5.00
Receivables turnover 9.11 8.10 8.12 7.36 6.65 7.18
Payables turnover 7.76 7.95 8.67 8.60 7.73 8.14
Working capital turnover 3.17 3.21 2.61 3.15 2.84 2.50
Average No. of Days
Average inventory processing period 96 94 88 90 87 73
Add: Average receivable collection period 40 45 45 50 55 51
Operating cycle 136 139 133 140 142 124
Less: Average payables payment period 47 46 42 42 47 45
Cash conversion cycle 89 93 91 98 95 79

Source: Based on data from Nike Inc. Annual Reports

Ratio Description The company
Inventory turnover An activity ratio calculated as cost of goods sold divided by inventory. Nike Inc.'s inventory turnover deteriorated from 2013 to 2014 and from 2014 to 2015.
Receivables turnover An activity ratio equal to revenue divided by receivables. Nike Inc.'s receivables turnover deteriorated from 2013 to 2014 but then improved from 2014 to 2015 exceeding 2013 level.
Payables turnover An activity ratio calculated as cost of goods sold divided by payables. Nike Inc.'s payables turnover declined from 2013 to 2014 and from 2014 to 2015.
Working capital turnover An activity ratio calculated as revenue divided by working capital. Nike Inc.'s working capital turnover improved from 2013 to 2014 but then slightly deteriorated from 2014 to 2015.
Average inventory processing period An activity ratio equal to the number of days in the period divided by inventory turnover over the period. Nike Inc.'s average inventory processing period deteriorated from 2013 to 2014 and from 2014 to 2015.
Average receivable collection period An activity ratio equal to the number of days in the period divided by receivables turnoverd.
Operating cycle Equal to average inventory processing period plus average receivables collection period.
Average payables payment period An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. Nike Inc.'s average payables payment period increased from 2013 to 2014 and from 2014 to 2015.
Cash conversion cycle A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. Nike Inc.'s cash conversion cycle deteriorated from 2013 to 2014 but then improved from 2014 to 2015 exceeding 2013 level.

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Inventory Turnover

Nike Inc., inventory turnover 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)
Cost of sales 16,534  15,353  14,279  13,657  11,354  10,214 
Inventories 4,337  3,947  3,434  3,350  2,715  2,041 
Ratio
Inventory turnover1 3.81 3.89 4.16 4.08 4.18 5.00
Benchmarks
Inventory Turnover, Industry
Consumer Goods 8.09 7.92 7.78 8.28 8.00

Source: Based on data from Nike Inc. Annual Reports

2015 Calculations

1 Inventory turnover = Cost of sales ÷ Inventories
= 16,534 ÷ 4,337 = 3.81

Ratio Description The company
Inventory turnover An activity ratio calculated as cost of goods sold divided by inventory. Nike Inc.'s inventory turnover deteriorated from 2013 to 2014 and from 2014 to 2015.

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Receivables Turnover

Nike Inc., receivables turnover 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)
Revenues 30,601  27,799  25,313  24,128  20,862  19,014 
Accounts receivable, net 3,358  3,434  3,117  3,280  3,138  2,650 
Ratio
Receivables turnover1 9.11 8.10 8.12 7.36 6.65 7.18
Benchmarks
Receivables Turnover, Industry
Consumer Goods 13.54 13.11 11.63 13.20 12.28

Source: Based on data from Nike Inc. Annual Reports

2015 Calculations

1 Receivables turnover = Revenues ÷ Accounts receivable, net
= 30,601 ÷ 3,358 = 9.11

Ratio Description The company
Receivables turnover An activity ratio equal to revenue divided by receivables. Nike Inc.'s receivables turnover deteriorated from 2013 to 2014 but then improved from 2014 to 2015 exceeding 2013 level.

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Payables Turnover

Nike Inc., payables turnover 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)
Cost of sales 16,534  15,353  14,279  13,657  11,354  10,214 
Accounts payable 2,131  1,930  1,646  1,588  1,469  1,255 
Ratio
Payables turnover1 7.76 7.95 8.67 8.60 7.73 8.14
Benchmarks
Payables Turnover, Industry
Consumer Goods 6.81 6.71 6.37 7.15 6.72

Source: Based on data from Nike Inc. Annual Reports

2015 Calculations

1 Payables turnover = Cost of sales ÷ Accounts payable
= 16,534 ÷ 2,131 = 7.76

Ratio Description The company
Payables turnover An activity ratio calculated as cost of goods sold divided by payables. Nike Inc.'s payables turnover declined from 2013 to 2014 and from 2014 to 2015.

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Working Capital Turnover

Nike Inc., working capital turnover 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)
Current assets 15,976  13,696  13,626  11,531  11,297  10,959 
Less: Current liabilities 6,334  5,027  3,926  3,865  3,958  3,364 
Working capital 9,642  8,669  9,700  7,666  7,339  7,595 
Revenues 30,601  27,799  25,313  24,128  20,862  19,014 
Ratio
Working capital turnover1 3.17 3.21 2.61 3.15 2.84 2.50
Benchmarks
Working Capital Turnover, Industry
Consumer Goods 23.31 18.50 20.24 26.30 18.98

Source: Based on data from Nike Inc. Annual Reports

2015 Calculations

1 Working capital turnover = Revenues ÷ Working capital
= 30,601 ÷ 9,642 = 3.17

Ratio Description The company
Working capital turnover An activity ratio calculated as revenue divided by working capital. Nike Inc.'s working capital turnover improved from 2013 to 2014 but then slightly deteriorated from 2014 to 2015.

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Average Inventory Processing Period

Nike Inc., average inventory processing period 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
Inventory turnover 3.81 3.89 4.16 4.08 4.18 5.00
Ratio (no. of days)
Average inventory processing period1 96 94 88 90 87 73
Benchmarks (no. of days)
Average Inventory Processing Period, Industry
Consumer Goods 45 46 47 44 46

Source: Based on data from Nike Inc. Annual Reports

2015 Calculations

1 Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 3.81 = 96

Ratio Description The company
Average inventory processing period An activity ratio equal to the number of days in the period divided by inventory turnover over the period. Nike Inc.'s average inventory processing period deteriorated from 2013 to 2014 and from 2014 to 2015.

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Average Receivable Collection Period

Nike Inc., average receivable collection period 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
Receivables turnover 9.11 8.10 8.12 7.36 6.65 7.18
Ratio (no. of days)
Average receivable collection period1 40 45 45 50 55 51
Benchmarks (no. of days)
Average Receivable Collection Period, Industry
Consumer Goods 27 28 31 28 30

Source: Based on data from Nike Inc. Annual Reports

2015 Calculations

1 Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 9.11 = 40

Ratio Description The company
Average receivable collection period An activity ratio equal to the number of days in the period divided by receivables turnoverd.

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Operating Cycle

Nike Inc., operating cycle calculation, comparison to benchmarks

No. of days

 
May 31, 2015 May 31, 2014 May 31, 2013 May 31, 2012 May 31, 2011 May 31, 2010
Selected Financial Data
Average inventory processing period 96 94 88 90 87 73
Average receivable collection period 40 45 45 50 55 51
Ratio
Operating cycle1 136 139 133 140 142 124
Benchmarks
Operating Cycle, Industry
Consumer Goods 72 74 78 72 76

Source: Based on data from Nike Inc. Annual Reports

2015 Calculations

1 Operating cycle = Average inventory processing period + Average receivable collection period
= 96 + 40 = 136

Ratio Description The company
Operating cycle Equal to average inventory processing period plus average receivables collection period.

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Average Payables Payment Period

Nike Inc., average payables payment period 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
Payables turnover 7.76 7.95 8.67 8.60 7.73 8.14
Ratio (no. of days)
Average payables payment period1 47 46 42 42 47 45
Benchmarks (no. of days)
Average Payables Payment Period, Industry
Consumer Goods 54 54 57 51 54

Source: Based on data from Nike Inc. Annual Reports

2015 Calculations

1 Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 7.76 = 47

Ratio Description The company
Average payables payment period An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. Nike Inc.'s average payables payment period increased from 2013 to 2014 and from 2014 to 2015.

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Cash Conversion Cycle

Nike Inc., cash conversion cycle calculation, comparison to benchmarks

No. of days

 
May 31, 2015 May 31, 2014 May 31, 2013 May 31, 2012 May 31, 2011 May 31, 2010
Selected Financial Data
Average inventory processing period 96 94 88 90 87 73
Average receivable collection period 40 45 45 50 55 51
Average payables payment period 47 46 42 42 47 45
Ratio
Cash conversion cycle1 89 93 91 98 95 79
Benchmarks
Cash Conversion Cycle, Industry
Consumer Goods 18 20 21 21 22

Source: Based on data from Nike Inc. Annual Reports

2015 Calculations

1 Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 96 + 40 – 47 = 89

Ratio Description The company
Cash conversion cycle A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. Nike Inc.'s cash conversion cycle deteriorated from 2013 to 2014 but then improved from 2014 to 2015 exceeding 2013 level.

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