Nike Inc. (NYSE:NKE)

The short-term operating activity ratios exhibit varied trends over the observed period. Generally, the period from August 2020 through May 2022 demonstrates a relatively stable performance, followed by increased volatility and, in some cases, a declining trend in efficiency metrics. A subsequent stabilization and slight improvement is noted towards the end of the period.

Inventory Management

Inventory turnover generally fluctuated between 3.17 and 3.85 from August 2020 to November 2021. A decline is then observed, falling to a low of 2.67 by August 2022, before recovering to around 3.68 by February 2024. The most recent periods show a slight decrease again, ending at 3.68 in February 2026. Correspondingly, the average inventory processing period increased from 115 days in August 2020 to 137 days in August 2022, then decreased to 99 days in February 2024, before increasing to 110 days in February 2026. This suggests a potential slowdown in inventory liquidation followed by improved efficiency, and then a slight regression.

Receivables Management

Receivables turnover showed an increasing trend from 9.79 in August 2020 to a peak of 12.40 in February 2022, indicating improved efficiency in collecting receivables. However, it then decreased to 8.11 by February 2026. The average receivable collection period decreased from 37 days in August 2020 to 29 days in February 2022, then increased to 45 days in February 2026. This mirrors the turnover trend, suggesting a lengthening of the time required to collect outstanding receivables in recent periods.

Payables Management

Payables turnover exhibited more volatility. It decreased from 10.70 in August 2020 to 7.51 in May 2022, then increased to 12.28 in February 2024, before decreasing to 7.15 in February 2026. The average payables payment period increased from 34 days in August 2020 to 49 days in May 2022, decreased to 30 days in February 2024, and then increased to 51 days in February 2026. This suggests fluctuating terms with suppliers and potentially a shift in payment strategies.

Overall Operating Cycle & Cash Conversion Cycle

The operating cycle generally decreased from 152 days in August 2020 to 125 days in November 2021, then increased to 175 days in August 2022, before decreasing to 127 days in May 2024 and increasing to 148 days in February 2026. The cash conversion cycle followed a similar pattern, decreasing from 118 days in August 2020 to 84 days in November 2021, increasing to 109 days in August 2022, decreasing to 90 days in May 2024, and increasing to 98 days in February 2026. These cycles reflect the combined effects of changes in inventory, receivables, and payables management. The recent increases in both cycles suggest a lengthening of the time it takes to convert investments in resources into cash.

Working Capital Turnover

Working capital turnover showed a general increasing trend from 2.80 in August 2020 to 3.77 in February 2026, indicating improved efficiency in utilizing working capital. However, the increase is not consistent, with some fluctuations observed throughout the period.

In summary, the company experienced a period of relatively stable operating activity from 2020 to 2022. Following this, a period of increased volatility and, in some cases, declining efficiency was observed, particularly in receivables and inventory management. Recent periods suggest a stabilization, but with a potential for slight regression in certain areas. Further investigation into the underlying causes of these trends is recommended.

The inventory turnover ratio exhibits fluctuations over the observed period, generally indicating the efficiency with which inventory is being sold. An initial increase is noted, followed by periods of relative stability and subsequent decline, with a recent stabilization and slight increase.

Initial Trend (Aug 31, 2020 – Nov 30, 2021)

The inventory turnover ratio increased from 3.17 to 3.85. This suggests improving inventory management and a faster rate of sales relative to inventory levels during this timeframe. The increase indicates a more efficient operation in converting inventory into revenue.

Subsequent Decline (Feb 28, 2022 – Aug 31, 2023)

Following the peak in November 2021, the ratio decreased to 2.67 by February 2022. This decline continued, reaching a low of 3.19 in February 2023. This period may reflect increased inventory levels, slower sales, or a combination of both. The increase in inventories during this period, as evidenced by the accompanying figures, supports the hypothesis of slower sales relative to inventory holdings.

Stabilization and Recent Trend (Nov 30, 2023 – May 31, 2025)

From November 2023 through May 2025, the inventory turnover ratio demonstrates a degree of stabilization, fluctuating between 3.54 and 3.79. This suggests that the factors contributing to the earlier decline may have been addressed, or that a new equilibrium has been reached. The most recent value, 3.79, indicates a slight improvement compared to the lows observed in 2022 and early 2023.

Overall Observations

The fluctuations in the inventory turnover ratio correlate with changes in both cost of sales and inventory levels. Periods of increasing turnover generally coincide with higher cost of sales and relatively stable or decreasing inventory. Conversely, declining turnover is associated with either decreasing cost of sales or increasing inventory, or both. The recent stabilization suggests a potential improvement in inventory management practices or a response to market conditions.

Further investigation into the underlying drivers of these fluctuations, such as changes in product mix, promotional activities, or supply chain dynamics, would provide a more comprehensive understanding of the observed trends.

The receivables turnover ratio exhibits fluctuations over the observed period, generally indicating the efficiency with which the company converts its receivables into cash. An initial period of relative stability is followed by increased volatility, with a recent downward trend warranting attention.

Overall Trend

From August 2020 through May 2021, the receivables turnover ratio remained relatively consistent, fluctuating between 9.79 and 10.64. A notable increase occurred in November 2021 (12.36), followed by a similar value in February 2022 (12.23). Subsequently, the ratio decreased, reaching a low of 8.11 in February 2026. The period from August 2022 to November 2024 shows a general decline, with some minor recoveries.

Peak Performance

The highest receivables turnover ratios were recorded in November 2021 and February 2022, both at 12.36 and 12.23 respectively. These values suggest a particularly efficient collection process during those periods, potentially linked to seasonal sales or specific promotional activities. Revenues were also relatively high during this period.

Recent Decline

A concerning downward trend is observed in the most recent periods. The ratio decreased from 10.78 in November 2023 to 8.11 in February 2026. This suggests a lengthening of the collection cycle, potentially indicating issues with credit policies, customer payment behavior, or increased difficulty in collecting outstanding debts. The decline coincides with a period of relatively stable, but not increasing, revenue.

Correlation with Revenues

While not a perfect correlation, the receivables turnover ratio generally moves in opposition to accounts receivable balances. Periods of higher revenue often correlate with higher turnover ratios, and vice versa. However, the recent decline in turnover is not directly mirrored by a corresponding decline in revenue, suggesting factors beyond sales volume are influencing the ratio.

Quarterly Volatility

The ratio demonstrates quarterly volatility, particularly after February 2022. This suggests that the company’s receivables collection efficiency is subject to seasonal or cyclical influences, or potentially inconsistent application of credit and collection policies. Further investigation into the drivers of this volatility is recommended.

The accounts payable turnover ratio for the analyzed period demonstrates considerable fluctuation. Initially, the ratio exhibited a decline from 10.70 to 8.67 between August 2020 and May 2021. Subsequently, a notable increase to 11.84 was observed in August 2021, followed by another decrease to 8.95 by November 2021. The ratio generally remained between 7.15 and 12.28 throughout the remainder of the period, with no consistently clear upward or downward trajectory.

Initial Decline (Aug 2020 - May 2021)

A decrease in the payables turnover ratio during this period suggests a lengthening of the time taken to pay suppliers. This could be attributed to several factors, including a deliberate strategy to preserve cash, increased negotiating power with suppliers resulting in extended payment terms, or potentially, a slowdown in the payment process. The concurrent increase in accounts payable during this timeframe supports the notion of slower payments.

Subsequent Volatility (Aug 2021 - May 2024)

Following the peak in August 2021, the ratio experienced significant variability. Fluctuations likely reflect changes in purchasing patterns, supplier relationships, and the timing of payments relative to cost of sales. The ratio dipped to a low of 7.15 in February 2025, before recovering somewhat.

Recent Trend (Feb 2025 - May 2025)

The most recent data indicates a slight increase in the ratio from 7.15 in February 2025 to 7.37 in May 2025, and then to 9.53 in February 2026. This suggests a potential acceleration in the rate at which obligations to suppliers are being settled, although further observation is needed to confirm a sustained trend.

Relationship to Cost of Sales

The payables turnover ratio is calculated in relation to cost of sales. While cost of sales generally increased over the period, the ratio’s fluctuations indicate that changes in accounts payable have had a more pronounced effect on the turnover rate than changes in cost of sales alone. Periods of increasing cost of sales did not always correlate with increases in the payables turnover ratio, and vice versa.

Overall, the accounts payable turnover ratio demonstrates a dynamic pattern, indicating that the company’s payment practices and supplier relationships have been subject to change. The observed fluctuations warrant continued monitoring to assess the underlying causes and potential implications for liquidity and operational efficiency.

The working capital turnover ratio exhibits a generally increasing trend over the observed period, with some fluctuations. Initially, the ratio decreased from 2.80 in August 2020 to 2.44 in February 2021. Subsequently, it experienced a recovery, peaking at 3.77 in February 2026, with a slight decrease to 3.76 in May 2026.

Initial Decline (Aug 2020 - Feb 2021)

The ratio’s decline during this period suggests a less efficient utilization of working capital relative to revenue generation. This could be attributed to an increase in working capital components, such as inventory or accounts receivable, without a corresponding increase in sales. Alternatively, a temporary decrease in revenue could also contribute to this decline.

Recovery and Growth (Feb 2021 - Feb 2026)

From February 2021 through February 2026, the ratio generally increased, indicating improved efficiency in managing working capital. This suggests that the company was generating more revenue for each dollar invested in working capital. The most significant increase occurred between February 2024 and May 2024, rising from 3.28 to 3.47, and again between May 2024 and February 2026, rising from 3.47 to 3.77.

Recent Performance (Feb 2026 - May 2026)

The slight decrease from 3.77 in February 2026 to 3.76 in May 2026 is minimal and may not indicate a significant shift in operational efficiency. It could be due to seasonal fluctuations or short-term changes in working capital levels.

Overall Trend

The overall trend demonstrates a positive trajectory in working capital management. The company appears to be becoming more effective at converting its working capital into sales. The ratio consistently remained above 2.50 for most of the period, suggesting a reasonably efficient operation. The values above 3.00 in the later periods indicate a strong ability to generate revenue from its working capital investments.

Fluctuations in the ratio should be further investigated in conjunction with changes in individual working capital components and revenue streams to determine the underlying drivers of these movements.

The average inventory processing period exhibited fluctuations over the observed timeframe. Initially, a decrease was noted, followed by periods of increase and relative stabilization. A general observation suggests a lengthening of the processing period in more recent quarters, though with some variability.

Initial Phase (Aug 31, 2020 – Nov 30, 2021)

The average inventory processing period began at 115 days and generally decreased to 95 days by November 30, 2021. This indicates an improvement in inventory management efficiency during this period, with inventory being converted into sales more quickly. The most significant reduction occurred between August 31, 2020, and November 30, 2020, followed by a more gradual decline.

Fluctuation and Lengthening (Feb 28, 2022 – May 31, 2023)

From February 28, 2022, the average inventory processing period began to increase, reaching 122 days in May 31, 2022. It then fluctuated between 114 and 107 days through May 31, 2023. This suggests potential challenges in maintaining the previously achieved inventory efficiency, possibly due to supply chain disruptions or shifts in demand patterns.

Recent Trends (Aug 31, 2023 – May 31, 2025)

The period from August 31, 2023, to May 31, 2025, shows a continued tendency towards a longer processing period. The metric increased from 101 days to 103 days, then fluctuated around that level. While not a dramatic increase, the consistent values above 100 days suggest a potential shift in the company’s inventory dynamics. The latest reported value, 103 days, is higher than the lows observed in 2021.

Overall Variability

The range of the average inventory processing period over the entire period is 18 days (95 to 113). This indicates a moderate level of variability, suggesting that external factors or internal operational changes have a noticeable impact on the speed at which inventory is processed. The most recent quarters show a relative stabilization, but at a higher level than previously observed.

In summary, the average inventory processing period demonstrated initial improvements followed by a period of fluctuation and a recent trend towards longer processing times. Further investigation may be warranted to understand the underlying causes of these changes and their potential impact on operational efficiency and profitability.

The average receivable collection period exhibited fluctuations over the observed timeframe. Initially, the period remained relatively stable, followed by a period of decline, and subsequently increased before stabilizing again. A detailed examination reveals specific trends and patterns.

Overall Trend

The average receivable collection period generally decreased from 37 days in August 2020 to a low of 29 days in February 2022. Following this decline, the period increased, peaking at 45 days in May 2025, before decreasing slightly to 42 days in February 2026.

Initial Stability and Decline (Aug 2020 - Feb 2022)

From August 2020 through February 2022, the collection period demonstrated a generally decreasing trend. It began at 37 days, briefly fluctuated, and then consistently decreased to reach its lowest point of 29 days. This suggests improving efficiency in collecting receivables during this period.

Period of Increase (Feb 2022 - May 2025)

Beginning in February 2022, the average collection period began to increase. The period rose from 33 days to 45 days over the course of three years. This increase could indicate a loosening of credit terms, potential issues with customer payment behavior, or a shift in the customer base.

Recent Stabilization (May 2025 - Feb 2026)

The most recent observations show a slight decrease from 45 days in May 2025 to 42 days in February 2026. While a decrease, it remains elevated compared to the period between August 2020 and February 2022. This suggests that while collection efforts may be improving, the period has not returned to its previous efficiency levels.

Seasonal Variations

There is some evidence of seasonal variation. Collection periods tended to be higher towards the end of the fiscal year (November/February) in several observed periods, potentially reflecting billing cycles or payment patterns related to year-end activities.

In summary, the average receivable collection period experienced a period of improvement followed by a period of lengthening, with a recent indication of slight stabilization at a higher level than previously observed. Further investigation into the underlying causes of these fluctuations may be warranted.

The operating cycle, calculated as the sum of the average inventory processing period and the average receivable collection period, exhibits fluctuations over the observed timeframe. Analysis reveals trends in both components contributing to the overall cycle length.

Operating Cycle Trend

The operating cycle generally decreased from 152 days in August 2020 to a low of 125 days in November 2021. A subsequent increase is observed, peaking at 175 days in August 2022, before declining again to 141 days by February 2026. This suggests periods of improved efficiency in converting inventory to cash, followed by periods of lengthening conversion times. The most recent values indicate a slight increase from 141 days to 148 days in May 2025 and then to 149 days in February 2026.

Average Inventory Processing Period

The average inventory processing period demonstrates variability. It initially decreased from 115 days in August 2020 to 97 days in August 2021, indicating improved inventory management. However, it then increased significantly, reaching 137 days in August 2022. A downward trend is then apparent, falling to 98 days in February 2024, before increasing again to 110 days in February 2026. This suggests potential challenges in maintaining consistent inventory turnover, with periods of slower processing potentially linked to supply chain disruptions or changes in product mix.

Average Receivable Collection Period

The average receivable collection period generally remained relatively stable between 30 and 40 days for much of the period. A noticeable increase is observed from 34 days in August 2021 to 45 days in May 2025, suggesting a potential slowdown in collecting payments from customers. This trend reverses somewhat, with the period decreasing to 42 days in February 2026. The increase in the collection period could indicate a shift in customer credit terms, increased difficulty in collecting receivables, or a change in the customer base.

The combined effect of these trends results in the fluctuations observed in the overall operating cycle. The increase in both the inventory processing period and the receivable collection period contributed to the peak in the operating cycle in August 2022. Subsequent improvements in inventory management and, to a lesser extent, receivable collection led to a decrease in the cycle length. The recent increases in both components suggest a potential need to reassess inventory and credit policies.

The average payables payment period exhibited fluctuations over the observed period, ranging from a low of 30 days to a high of 51 days. An initial increasing trend is noted from 34 days in August 2020 to 42 days in May 2021. Subsequently, the period decreased to 31 days by August 2021 before increasing again to 41 days in November 2021.

Overall Trend

From February 2022 through May 2023, the average payables payment period generally remained between 34 and 49 days, demonstrating a degree of stability with periodic increases. A notable increase occurred from May 2024 to November 2024, rising from 37 days to 48 days. The period then decreased to 38 days by February 2026.

A cyclical pattern appears to be present, with periods of increase followed by periods of decrease. The most extended payment periods were observed in November 2021 (41 days), May 2022 (49 days), November 2024 (48 days), and February 2025 (51 days). The shortest payment periods were recorded in August 2020 (34 days), August 2021 (31 days), and February 2026 (30 days).

Recent Performance

The most recent values indicate a decrease in the average payables payment period, moving from 44 days in August 2024 to 38 days in February 2026. This suggests a potential improvement in the efficiency of managing payments to suppliers.

The variations in the average payables payment period may be influenced by factors such as supplier negotiations, seasonal fluctuations in purchasing activity, and changes in the company’s cash flow management strategies. Further investigation into these factors would be necessary to fully understand the observed trends.

The cash conversion cycle exhibited fluctuations over the observed period, generally ranging between 84 and 127 days. A notable decrease was observed from the beginning of the period to late 2021, followed by a period of relative stability and then an increase into early 2022. Subsequent quarters show some volatility, with a recent trend towards stabilization in the most recent periods.

Average Inventory Processing Period

The average inventory processing period demonstrated variability. It began at 115 days in August 2020, decreased to a low of 95 days in November 2021, and then increased to a peak of 137 days in August 2022. Following this peak, the period generally trended downwards, reaching 98 days in February 2024, before fluctuating between 102 and 110 days through May 2025. The most recent observation in August 2025 is 110 days.

Average Receivable Collection Period

The average receivable collection period generally remained relatively stable in the earlier part of the period, fluctuating around 35 days. A decrease to a low of 29 days was observed in May 2021. From February 2022, the collection period began to increase, peaking at 45 days in May 2024, before decreasing slightly to 42 days in February 2026.

Average Payables Payment Period

The average payables payment period showed a more pronounced upward trend. Starting at 34 days in August 2020, it increased to 49 days in May 2022. A subsequent decrease was observed, but the period generally remained above the initial value, reaching 51 days in February 2025, and then decreasing to 38 days in February 2026.

Cash Conversion Cycle – Integrated Analysis

The initial decrease in the cash conversion cycle through late 2021 appears to be driven by a combination of decreasing inventory processing and receivable collection periods, partially offset by an increasing payables payment period. The subsequent increase in the cycle in 2022 is largely attributable to the increase in the inventory processing period. The recent stabilization suggests a balancing of these components. The lengthening of the payables period, particularly in 2022 and 2025, may indicate a strategy to preserve cash, but also requires monitoring to ensure it does not strain supplier relationships. The increase in the receivable collection period in the later periods suggests a potential slowdown in collecting payments from customers, which could impact liquidity.

Overall, the observed trends suggest a dynamic interplay between inventory management, credit policies, and supplier negotiations. Continued monitoring of these ratios is recommended to identify potential areas for improvement in working capital management.