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 2023 demonstrates a degree of stability, followed by more pronounced fluctuations. Inventory management, accounts receivable handling, accounts payable management, and overall working capital efficiency all show distinct patterns worthy of note.

Inventory Turnover

Inventory turnover generally increased from 3.17 in August 2020 to a peak of 3.85 in November 2021. However, a subsequent decline is observed, reaching a low of 2.67 in August 2022. The ratio then recovers somewhat, fluctuating between 3.19 and 3.79 through May 2024, before decreasing again to 3.32 in February 2025. This suggests potential challenges in inventory management during the 2022-2023 timeframe, followed by a partial correction, and then renewed challenges.

Receivables Turnover

Receivables turnover shows an increasing trend from 9.79 in August 2020 to 12.40 in February 2023. A subsequent decline is evident, falling to 8.11 in May 2024, and continuing to 9.36 in February 2025. This indicates a lengthening of the collection period, potentially due to changes in credit policies or customer payment behavior. The initial increase suggests improved efficiency in collecting receivables.

Payables Turnover

Payables turnover is relatively stable between 10.70 and 8.67 from August 2020 to May 2021. A more significant decrease is observed from November 2021 to May 2022, reaching a low of 7.51. The ratio then partially recovers, fluctuating between 9.68 and 12.28 through February 2024, before declining again to 7.37 in May 2025. This suggests a shifting strategy in managing supplier payments, potentially influenced by cash flow considerations or supplier negotiations.

Working Capital Turnover

Working capital turnover demonstrates a consistent upward trend from 2.80 in August 2020 to 3.76 in May 2024. A slight decrease is observed in February 2025, falling to 3.58. This indicates increasing efficiency in utilizing working capital to generate sales, although the recent dip warrants monitoring.

Average Inventory Processing Period

The average inventory processing period generally decreased from 115 days in August 2020 to a low of 95 days in November 2021. It then increased significantly, peaking at 137 days in August 2022, before fluctuating between 101 and 114 days through February 2024. A slight increase to 103 days is observed in May 2024. This mirrors the trends in inventory turnover, suggesting a lengthening time to sell inventory during certain periods.

Average Receivable Collection Period

The average receivable collection period decreased from 37 days in August 2020 to 30 days in November 2021, indicating improved collection efficiency. However, it then increased to 45 days in May 2024 and 45 days in November 2025, suggesting a slowdown in collecting payments from customers. This aligns with the observed decline in receivables turnover.

Cash Conversion Cycle

The cash conversion cycle generally decreased from 118 days in August 2020 to a low of 84 days in November 2021. It then increased to 127 days in August 2022, before fluctuating between 90 and 109 days through February 2024. A slight increase to 98 days is observed in May 2024. The cycle reflects the combined effects of changes in inventory processing, receivable collection, and payable payment periods.

In summary, the analyzed ratios suggest a period of improving operational efficiency through November 2021, followed by increasing challenges in inventory management and receivable collection, particularly evident from August 2022 onwards. While working capital turnover generally improved, the recent fluctuations in several key ratios warrant continued monitoring to assess the sustainability of operational performance.

The inventory turnover ratio exhibits fluctuations over the observed period, generally indicating changes in the efficiency of inventory management. An initial increase is followed by a period of decline, then a recovery, and finally a slight decrease again. The ratio is calculated by dividing the cost of sales by average inventories.

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

The inventory turnover ratio increased from 3.17 to 3.85. This suggests an improved ability to convert inventory into sales during this timeframe. The increase could be attributed to effective sales strategies, efficient supply chain management, or a reduction in obsolete inventory.

Decline (Feb 28, 2022 – Feb 28, 2023)

Following the peak in November 2021, the ratio decreased to 3.19. This decline may indicate slower sales, increased inventory levels, or a combination of both. The rise in inventories from US$7.7 billion to US$8.9 billion during this period supports the possibility of slower inventory conversion.

Recovery (May 31, 2023 – Feb 29, 2024)

The ratio experienced a recovery, rising from 3.19 to 3.72. This improvement coincided with a decrease in inventory levels from US$8.9 billion to US$7.7 billion, suggesting successful efforts to reduce excess stock and improve sales velocity. Cost of sales also remained relatively stable during this period.

Recent Trend (May 31, 2024 – Nov 30, 2025)

More recently, the ratio has shown a slight downward trend, decreasing from 3.79 to 3.54. While cost of sales has remained relatively consistent, inventories have fluctuated, with a slight increase observed in the most recent period. This suggests a potential slowing of inventory conversion, warranting further investigation.

Overall, the inventory turnover ratio demonstrates a cyclical pattern. While periods of improvement are evident, the recent slight decline suggests a need to monitor inventory levels and sales performance closely to maintain efficient inventory management.

The receivables turnover ratio exhibits fluctuations over the observed period, generally ranging between approximately 8 and 12.5. An initial period of relative stability is followed by increased variability, with a noticeable decline in the most recent quarters.

Overall Trend

From August 2020 through February 2021, the ratio remained relatively consistent, fluctuating between 9.79 and 10.64. A subsequent increase is observed, peaking at 12.36 in November 2021. Following this peak, the ratio demonstrates increased volatility, with a general downward trend becoming more pronounced in the latter half of the period.

Peak and Subsequent Decline

The highest receivables turnover ratio occurred in November 2021, at 12.36. This suggests efficient collection of receivables during that period. However, the ratio subsequently decreased, falling to 9.24 by August 2024 and further declining to 8.11 by May 2025. This decline warrants further investigation, as it may indicate a lengthening of the collection period or a potential increase in uncollectible accounts.

Recent Performance

The most recent four quarters (February 2024 – May 2025) show a consistent downward trend in the receivables turnover ratio. The ratio decreased from 11.40 in February 2024 to 8.11 in May 2025. This represents a significant decrease and suggests a potential weakening in the company’s ability to efficiently convert receivables into cash. The ratio’s decline in the most recent period is more substantial than any previous decrease observed within the analyzed timeframe.

Correlation with Revenues

While revenues generally increased over the period, the receivables turnover ratio did not consistently follow suit. Periods of revenue growth were not always accompanied by increases in the ratio, suggesting that the company’s collection efficiency may not be keeping pace with sales. The divergence between revenue trends and receivables turnover trends in the latter part of the period is particularly noteworthy.

In summary, the receivables turnover ratio demonstrates a pattern of initial stability, a peak in late 2021, and a subsequent decline, particularly pronounced in the most recent quarters. This trend suggests a potential deterioration in the efficiency of accounts receivable management and warrants further scrutiny.

The accounts payable turnover ratio exhibits fluctuations over the observed period, generally ranging between approximately 7.15 and 12.28. An initial decline is noted from August 2020 through May 2021, followed by a period of increased volatility. Subsequent quarters demonstrate a general trend towards stabilization, though with continued variability.

Initial Decline (Aug 31, 2020 – May 31, 2021)

The payables turnover ratio decreased from 10.70 in August 2020 to 8.67 in May 2021. This suggests a lengthening of the time taken to pay suppliers during this period. This could be attributable to a variety of factors, including strategic decisions to preserve cash, increased negotiating power with suppliers, or a shift in purchasing patterns.

Volatility and Recovery (Aug 31, 2021 – May 31, 2022)

Following the decline, the ratio experienced a significant increase to 11.84 in August 2021, before decreasing again to 7.51 in May 2022. This period indicates inconsistent payment practices. The increase in August 2021 could be due to accelerated payments to take advantage of early payment discounts or a reduction in outstanding payables. The subsequent decrease in May 2022 may reflect a return to more standard payment terms or increased purchasing activity.

Stabilization with Continued Variation (Aug 31, 2022 – May 31, 2025)

From August 2022 through May 2025, the payables turnover ratio remained relatively stable, fluctuating between approximately 7.15 and 12.28. While not consistently trending upwards or downwards, the ratio demonstrates a degree of responsiveness to changes in cost of sales and accounts payable balances. A peak of 12.28 is observed in February 2024, followed by a decline to 7.62 in February 2025. This suggests ongoing adjustments to payment strategies based on operational needs and financial conditions.

The observed fluctuations in the payables turnover ratio warrant further investigation to determine the underlying causes and assess their impact on the company’s financial health. Consistent monitoring of this ratio is recommended to identify potential issues with supplier relationships or cash flow management.

The working capital turnover ratio exhibits a generally increasing trend over the analyzed period, spanning from August 2020 to May 2025. Initial values indicate a ratio of 2.80, followed by a decrease to 2.44 before beginning a sustained climb. Fluctuations are present, but the overall trajectory points towards improved efficiency in utilizing working capital to generate revenue.

Initial Period (Aug 31, 2020 – Feb 28, 2021)

The ratio begins at 2.80 and declines to 2.44. This initial decrease suggests a potential slowdown in the rate at which working capital is converted into sales during this timeframe. Revenues also experienced a dip during this period, contributing to the lower turnover.

Recovery and Stabilization (May 31, 2021 – Nov 30, 2021)

From May 2021, the ratio demonstrates a recovery, increasing to 2.55 and then stabilizing around 2.53-2.58. This coincides with a period of relatively stable revenue generation, indicating a return to more typical operational efficiency.

Consistent Growth (Feb 28, 2022 – May 31, 2023)

A consistent upward trend is observed, with the ratio increasing from 2.58 to 3.21. This suggests a strengthening ability to generate sales from each dollar invested in working capital. Revenues also show growth during this period, supporting the improved turnover.

Peak and Recent Performance (Aug 31, 2023 – May 31, 2025)

The ratio peaks at 3.30 in November 2023, then experiences minor fluctuations, reaching 3.76 in May 2025. This indicates continued efficient working capital management, although the most recent periods show some variability. Revenues have also remained relatively high, contributing to the elevated turnover ratio.

Overall, the trend suggests improving operational efficiency regarding working capital utilization. The company appears to be increasingly effective at converting its investments in current assets and current liabilities into sales revenue. The recent fluctuations warrant continued monitoring to determine if they represent a temporary deviation or a shift in the underlying trend.

The average inventory processing period exhibited fluctuations over the observed timeframe. Initially, a decrease was noted, followed by periods of increase and relative stabilization, and then a final increase towards the end of the period.

Overall Trend

The average inventory processing period began at 115 days in August 2020. A decline was observed through November 2021, reaching a low of 95 days. Subsequently, the period increased, peaking at 137 days in May 2022, before fluctuating between 98 and 114 days through May 2024. The period then increased again, reaching 110 days in February 2025 and 103 days in May 2025.

Initial Decline (Aug 2020 - Nov 2021)

From August 2020 to November 2021, the average inventory processing period decreased by 20 days, indicating improved efficiency in managing inventory. This suggests a faster conversion of inventory into sales during this period. The most significant decrease occurred between August 2020 and November 2020 (13 days) and between August 2021 and November 2021 (2 days).

Subsequent Increase (Nov 2021 - May 2022)

Following the period of decline, the average inventory processing period increased by 42 days between November 2021 and May 2022. This suggests a slowdown in the rate of inventory turnover, potentially due to factors such as increased inventory levels, slower sales, or supply chain disruptions. The largest increase occurred between February 2022 and May 2022 (25 days).

Fluctuation and Recent Trend (May 2022 - May 2025)

From May 2022 through May 2025, the average inventory processing period demonstrated more variability, oscillating between 96 and 137 days. While there were periods of decrease, a general upward trend is apparent in the most recent observations, with the period increasing from 96 days in August 2021 to 103 days in May 2025. This suggests a potential re-emergence of challenges in inventory management or sales velocity.

The observed fluctuations warrant further investigation to determine the underlying causes and potential impacts on operational efficiency and financial performance.

The average receivable collection period demonstrates fluctuations over the observed timeframe. Initially, the period remained relatively stable, followed by a period of decline, and then exhibited increased variability. A general observation suggests a potential lengthening of the collection cycle in more recent periods.

Initial Stability (Aug 31, 2020 – Nov 30, 2020)

The average receivable collection period began at 37 days and decreased to 35 days, indicating a slight improvement in the efficiency of collecting receivables during this period. This suggests consistent credit and collection practices.

Period of Improvement (Dec 1, 2020 – Aug 31, 2021)

From 35 days, the collection period continued to decline, reaching a low of 30 days by November 30, 2021. This represents a positive trend, potentially attributable to more effective collection efforts or a change in customer payment terms. The period remained at 30 days through February 28, 2022.

Increasing Collection Period (Feb 28, 2022 – Aug 31, 2022)

Following the low of 30 days, the average collection period began to increase, reaching 38 days by August 31, 2022. This could indicate a loosening of credit terms, slower customer payments, or potential issues with the collection process.

Continued Variability and Lengthening Trend (Sep 1, 2022 – May 31, 2024)

The period continued to fluctuate, peaking at 40 days in November 2022, then decreasing to 31 days by May 31, 2024. However, the overall trend during this period suggests a gradual increase in the time taken to collect receivables.

Recent Increase (May 31, 2024 – Nov 30, 2025)

The most recent data indicates a further increase in the average collection period, reaching 45 days by November 30, 2025. This is the highest value observed throughout the entire timeframe and warrants further investigation to determine the underlying causes. Potential factors could include economic conditions, changes in customer behavior, or inefficiencies in the accounts receivable department.

In summary, while the average receivable collection period initially demonstrated improvement, a lengthening trend has emerged in recent periods, culminating in a notable increase. Monitoring this metric closely and identifying the reasons for the recent increase are crucial for maintaining healthy cash flow and managing credit risk.

The operating cycle, along with its component parts – average inventory processing period and average receivable collection period – exhibits fluctuations over the observed timeframe. An examination of these metrics reveals shifts in the efficiency with which the company manages its inventory and collects payments from customers.

Average Inventory Processing Period

The average inventory processing period generally remained between 97 and 137 days throughout the period. A noticeable increase occurred from May 31, 2021 (102 days) to August 31, 2022 (137 days), suggesting a potential slowdown in inventory turnover during that time. Subsequently, the period decreased to 98 days by February 29, 2024, before increasing again to 110 days by February 28, 2025. These fluctuations may be attributable to changes in supply chain dynamics, seasonal demand, or inventory management strategies.

Average Receivable Collection Period

The average receivable collection period demonstrated more variability. It generally ranged from 29 to 45 days. A consistent trend of increasing collection periods was observed from February 28, 2022 (30 days) to May 31, 2024 (31 days), peaking at 45 days on November 30, 2025. This suggests a lengthening of the time required to collect receivables, potentially indicating changes in credit policies, customer payment behavior, or collection efforts. A decrease was observed in the earlier periods, falling to a low of 29 days by May 31, 2023.

Operating Cycle

The operating cycle, calculated as the sum of the average inventory processing period and the average receivable collection period, varied between 125 and 175 days. The operating cycle mirrored the trends observed in its components. A peak of 175 days was recorded on August 31, 2022, coinciding with the highest inventory processing period. The lowest point was 125 days on November 30, 2021, corresponding with shorter periods for both inventory and receivables. The most recent values indicate a slight increase in the operating cycle, moving from 130 days on February 29, 2024, to 149 days on February 28, 2025. This suggests a potential lengthening of the cash conversion cycle.

Overall, the observed trends suggest a dynamic relationship between inventory management, receivable collection, and the overall operating cycle. Further investigation into the underlying factors driving these fluctuations would be beneficial for optimizing working capital management.

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. A noticeable increase occurred in August 2023, reaching 44 days, and continued into November 2023 at 44 days. The period then decreased to 30 days in February 2024, followed by an increase to 37 days in May 2024. Further increases were observed in subsequent quarters, peaking at 51 days in February 2025.

The period experienced a period of relative consistency between 34 and 38 days from August 2020 to November 2022. The most recent observations indicate a lengthening of the payment period, suggesting a potential shift in supplier relationships or internal payment processing practices. The increase from 34 days in February 2023 to 51 days in February 2025 represents a 50% increase in the time taken to settle payables.

Recent Fluctuations

The period demonstrated volatility in the latter half of the observation window. The decrease to 30 days in February 2024 was followed by increases in May, August, and November 2024, and culminated in the highest observed value of 51 days in February 2025. This suggests potential external factors impacting payment timing or a deliberate strategy to extend payment terms.

The observed changes in the average payables payment period warrant further investigation to determine the underlying causes and potential implications for liquidity and supplier relations.

The short-term operating activity of the company, as measured by its cash conversion cycle and component ratios, exhibits fluctuations over the observed period. Generally, the company demonstrates a capacity to manage its working capital, though variations exist. A detailed examination of each component ratio reveals specific trends.

Average Inventory Processing Period

The average inventory processing period generally remained between 97 and 137 days throughout the period. An initial decrease from 115 days in August 2020 to 102 days in November 2020 was followed by a period of relative stability around 102-112 days through May 2021. A subsequent increase was observed, peaking at 137 days in August 2022, before declining to 103 days by May 2024. The most recent observation in November 2024 shows a slight increase to 107 days. These fluctuations suggest potential shifts in inventory management strategies or external factors impacting supply chain efficiency.

Average Receivable Collection Period

The average receivable collection period showed a generally decreasing trend from 37 days in August 2020 to a low of 29 days in May 2022. However, this was followed by a consistent increase, reaching 45 days in May 2024 and remaining at 45 days in November 2024. This lengthening collection period could indicate a change in credit terms offered to customers, increased difficulty in collecting receivables, or a shift in the customer base.

Average Payables Payment Period

The average payables payment period demonstrated more volatility. It initially increased from 34 days in August 2020 to 42 days in May 2021, then decreased to 31 days in August 2021. A subsequent rise to 49 days in May 2022 was followed by a decrease to 34 days in February 2023. The period then increased again, reaching 51 days in February 2025. These changes likely reflect the company’s negotiation power with suppliers and its cash management practices.

Cash Conversion Cycle

The cash conversion cycle exhibited a general downward trend from 118 days in August 2020 to a low of 84 days in November 2021. However, it subsequently increased, peaking at 127 days in both August and November 2022. The cycle then decreased to 90 days in May 2024, before increasing to 103 days in November 2024. The cycle’s movements are a composite of the changes in the three component ratios. The increase in the cash conversion cycle in late 2022 and early 2023 suggests a less efficient use of working capital during that period, potentially due to increased inventory holding times and/or slower receivable collections. The recent stabilization and slight increase in the cycle warrant continued monitoring.

Overall, the company’s working capital management appears dynamic, responding to internal and external factors. The observed trends suggest a need for ongoing assessment of inventory control, credit policies, and supplier relationships to optimize the cash conversion cycle and maintain financial health.