Nike Inc. (NYSE:NKE)

Inventory Turnover

The inventory turnover ratio exhibits fluctuations across the observed quarters, initially showing a moderate decline from 3.85 to 2.87 around mid-2020, which may indicate slower inventory movement during that period. Post-2020, there is a recovery trend with values increasing steadily and peaking near 3.85 by late 2021. Subsequently, the ratio stabilizes between approximately 3.3 and 3.7, suggesting consistent inventory management in recent periods.

Receivables Turnover

Receivables turnover presents considerable variability, with an initial dip around late 2019 and early 2020, followed by a notable spike to 13.61 in mid-2020, implying an accelerated collection cycle during that quarter. This elevated turnover diminishes thereafter but remains generally elevated compared to prior years, fluctuating mostly between 9 and 12, indicating relatively efficient receivables management with occasional peaks reflecting improved collections speed.

Payables Turnover

Payables turnover ratio also varies, with values ranging from around 7.5 to over 12. Significantly, there is a rise above 10 during several quarters, especially in late 2021 and early 2022, suggesting faster payment of liabilities. However, the ratio declines to levels near 8 in later periods, indicating a trend towards relatively slower payables payment cycles in recent quarters.

Working Capital Turnover

Working capital turnover shows an overall descending trend after an initial high of 5.53 in mid-2019 down to approximately 2.44 by mid-2020, pointing to a reduced efficiency in utilizing working capital during that time frame. Thereafter, the ratio gradually recovers, reaching values around 3.5 by the latest quarters, signaling an improvement in working capital utilization.

Average Inventory Processing Period

The average inventory processing period lengthened notably from the mid-90s days range pre-2020 to a peak of 137 days in late 2021, reflecting slower inventory turnover. It gradually reduced thereafter but remained elevated compared to earlier years, fluctuating mostly between 96 and 109 days in recent quarters, indicating a somewhat prolonged inventory holding period.

Average Receivable Collection Period

The average receivable collection period exhibits variability, shortening significantly during mid-2020 to as low as 27 days, evidencing improved collection efficiency. However, this is followed by an increase to around 40 days in various subsequent quarters, suggesting moderate variability but relatively stable collection periods averaging between 30 and 40 days over the full timeline.

Operating Cycle

The operating cycle generally expanded from approximately 135 days in 2018-2019 to a peak around 175 days in late 2021, indicating an elongation in the time required to convert inventory and receivables into cash. Recently, it has shortened back to the range of 127–147 days, reflecting slight improvements in operating efficiency.

Average Payables Payment Period

The average payables payment period ranged from roughly 30 days to nearly 49 days, with a tendency to increase around 2021 and 2022 before retreating in later periods. This suggests fluctuating payment terms or timing with suppliers, with some quarters evidencing extended periods before settling payables.

Cash Conversion Cycle

The cash conversion cycle mirrors the operating cycle trend, initially rising from low 90s days to over 120 days at its peak around late 2021 and early 2022. Subsequently, the cycle exhibits a decreasing trend down to approximately 90-100 days in the latest quarters, indicating an overall improvement in the efficiency of converting resources into cash within a one-year horizon.

Cost of Sales

The cost of sales demonstrated fluctuations over the periods analyzed. Starting at a value of 5551 million USD in August 2018, the figure slightly decreased and stabilized around the mid-5000s until early 2020. A notable dip occurred in May 2020, dropping to 3960 million USD, likely reflecting external disruptions. Subsequently, the cost of sales rebounded and generally increased, reaching peaks above 7000 million USD in late 2022 and early 2023, before experiencing some declines and moderate increases through mid-2024.

Inventories

Inventories exhibited a consistent upward trend throughout the period. Beginning at 5227 million USD in August 2018, inventory levels increased steadily, with some volatility around 2020. The inventory balance peaked at 9662 million USD in August 2022, indicating a buildup of stock. Although there was a slight decrease following this peak, inventory levels remained elevated relative to the initial periods, suggesting a strategic accumulation or slower turnover of goods.

Inventory Turnover

Inventory turnover ratios showed variability, generally ranging between approximately 2.67 and 3.92 over the periods recorded. Initially reported at 3.85 in February 2019, turnover experienced declines through 2021 and 2022, reaching a low around 2.67 in early 2022. From that point, turnover ratios improved moderately, fluctuating between 3.19 and 3.79 through early 2025. The decrease followed by recovery in inventory turnover corresponds with the fluctuations in inventory levels and cost of sales, indicating changing efficiency in inventory management over time.

Overall Insights

The relationship between cost of sales and inventories indicates periods of operational adjustment or market influence, especially noticeable around the mid-2020 timeframe. The significant buildup in inventories alongside dips in turnover suggests possible challenges in converting stock into sales during certain periods. The subsequent recovery in turnover implies efforts to improve inventory efficiency. Overall, the trends reflect a dynamic environment impacting sales cost, stock levels, and inventory management effectiveness.

The quarterly financial data shows notable variations in revenues, accounts receivable, and receivables turnover for the company over the analyzed periods.

Revenues

Revenues generally exhibit a fluctuating but upward trend from August 2018 through November 2021, rising from approximately $9,948 million to a peak near $12,344 million in May 2021. Thereafter, revenues experience some volatility, with dips observed particularly during May 2020, coinciding with broader global challenges during that period. Following that low, revenues recover and continue to increase until November 2022, where a peak near $13,315 million is noted. However, from late 2022 into early 2025, revenues display a somewhat uneven pattern with periods of both decline and growth, ultimately reaching around $11,269 million in February 2025.

Accounts Receivable, net

The net accounts receivable balance reflects some degree of correlation with revenue movements but with distinctive volatility. It fluctuates between roughly $2,749 million during May 2020 and peaks around $5,437 million in February 2023. Significant increases are observed starting in mid-2021, continuing until early 2023, suggesting a rising balance in receivables that may indicate either extended credit terms, increased sales on credit, or collection timing differences. Post-February 2023, accounts receivable levels show a corrective decrease but remain elevated compared to earlier years.

Receivables Turnover Ratio

The receivables turnover ratio, indicating the efficiency of collecting receivables, generally ranges between 8.5 and 13.6. It is notably higher in the mid-2020 period (May 2020: 13.61), likely reflecting improved collection or lower receivables balances during the revenue dip. Subsequently, the ratio stabilizes mainly between 9.0 and 12.5, with some fluctuations possibly reflecting changes in credit policies or collection effectiveness over time. The ratio decreases somewhat towards the end of the dataset, suggesting a slight decline in collection efficiency relative to receivables levels.

Overall, the data illustrate periods of revenue growth tempered by episodic downturns, mirrored by corresponding changes in accounts receivable that sometimes lead to elevated receivables balances. The receivables turnover ratio implies general stability in collection processes, though some variation suggests evolving operational factors affecting receivables management. The interplay among these metrics warrants continuous monitoring to optimize working capital and maintain liquidity.

The analysis of the cost of sales indicates fluctuating trends over the observed periods. Initially, the cost of sales ranged around 5,200 to 5,800 million US dollars, with some moderate fluctuations. A notable decline is observed in May 2020, where the cost dropped sharply to 3,960 million US dollars, likely due to external factors impacting operations. Following this dip, the cost of sales rebounded, exceeding previous levels and reaching peaks above 7,000 million US dollars in late 2022 and mid-2023, before showing some volatility and slight decreases towards early 2025.

Accounts payable demonstrate variability that does not always move in tandem with the cost of sales. The payables figures oscillate between approximately 2,200 and 3,300 million US dollars. Similar to the cost of sales, a dip is noted during the mid-2020 period, but accounts payable quickly rose afterward, peaking around late 2022 and mid-2023 at roughly 3,300 million US dollars. This indicates changing payment cycles or terms with suppliers, potentially reflecting strategic or market-driven decisions.

The payables turnover ratio, available from early 2019 onward, shows a general upward trend indicating improved efficiency in paying suppliers over time. The ratio exhibits notable rises and falls but trends mostly above 8 throughout the period. There is a discernible peak in May 2024 reaching 12.28, highlighting a period of faster payment to suppliers. The earlier period between 2019 and 2020 features lower turnover ratios, possibly corresponding with the lower cost of sales and operational disruptions. The turnover ratio's subsequent increases suggest an adaptation or normalization of payment practices post-2020 disruptions.

Cost of Sales

Displayed substantial volatility, with a sharp decline during mid-2020, followed by a strong recovery and reaching new highs in late 2022 and 2023, before a mild decline approaching early 2025.

Accounts Payable

Also fluctuated but with less direct correlation to cost of sales. Increased notably post-mid-2020 and maintained higher levels through 2022-2023, implying changes in supplier payment management.

Payables Turnover Ratio

Generally improved over time, indicating faster payments to suppliers, with a significant peak in mid-2024. Variations suggest operational and strategic adjustments impacting payment velocity, especially post-2020.

In summary, the data reflects a period of operational disruption around mid-2020, followed by recovery and strategic adjustments in payment terms and cost management. The improvements in payables turnover may reflect strengthened liquidity management or supplier relationship strategies. Monitoring these trends can provide insights into working capital efficiency and financial stability going forward.

Working Capital

The working capital values exhibit notable fluctuations over the observed periods. Initially, from August 2018 to February 2020, there is a general decline from 8,793 million USD to 7,464 million USD. Following this decline, a significant increase is observed beginning in May 2020, peaking around May 2021 at 16,617 million USD. After reaching this peak, working capital shows some volatility but overall a declining trend resumes, falling to 13,386 million USD by February 2025. This pattern suggests an initial tightening of working capital, followed by a period of accumulation and expansion, and then a gradual reduction towards the end of the timeline.

Revenues

Revenues demonstrate considerable variation, with some seasonal or cyclical effects possible. From August 2018 to February 2020, revenues remain relatively stable, fluctuating between approximately 9,300 and 10,600 million USD. A sharp drop occurs in May 2020 to 6,313 million USD, likely impacted by external events affecting sales during that period. Subsequently, revenues rebound strongly from August 2020 through May 2021, reaching a high of 12,344 million USD. Afterward, revenues show alternating increases and decreases but remain generally higher than pre-May 2020 levels, oscillating around 11,000 to 13,000 million USD through February 2025. The data indicates recovery and growth following the mid-2020 downturn, with some variability in later periods.

Working Capital Turnover

The working capital turnover ratio, which is only available from May 2019 onward, shows a downward trend initially from 4.52 in May 2019 to a low of 2.44 in November 2020. This decline suggests a reduction in the efficiency of using working capital to generate revenues during this period, particularly coincident with the drop in revenues in mid-2020. Following this low point, a gradual recovery in turnover is observed, trending upward to 3.57 by February 2025. Despite this improvement, the ratio remains below the levels seen in 2019, indicating that while efficiency is improving, it has not fully returned to previous peaks. This trend reflects the impact of operational challenges and recovery on working capital management efficiency over time.

Inventory Turnover Ratio Trends

The inventory turnover ratio demonstrates variability over the observed periods, generally fluctuating between approximately 2.67 and 3.92. From August 2018 to February 2019, data is unavailable. Starting May 2019, the ratio begins around 3.85, with a slight decrease to 3.61 by February 2020. A notable dip occurs in May 2020 to 2.87, potentially reflecting external disruptions. Recovery is seen through to November 2021, peaking at 3.85 again. Subsequently, the ratio declines, reaching a low of 2.67 in August 2022. From then on, a gradual recovery is evidenced, climbing to around 3.79 by February 2024 before slightly decreasing towards 3.56 by February 2025.

Average Inventory Processing Period Trends

The average inventory processing period shows an inverse pattern to the inventory turnover ratio, as expected, fluctuating mostly between 95 and 137 days. Beginning at 95 days in May 2019, the period increases to a peak of 127 days by August 2020. After fluctuations, it returns to approximately 95 days again by February 2022. A steep increase follows, peaking at 137 days in August 2022, aligning with the lowest turnover points. Subsequently, there is a downward trend in processing days through early 2025, with occasional minor increases, settling around 102 days by February 2025.

Relationship Between Inventory Turnover and Processing Period

The data reinforces the inverse relationship between inventory turnover and average processing period. Periods with high turnover ratios correspond to shorter processing periods and vice versa. For instance, the lowest inventory turnover in August 2022 (2.67) coincides with the highest average processing period (137 days). Recovery in turnover ratios aligns with decreases in processing periods during the latter part of the dataset.

Overall Insights

The observed fluctuations suggest periodic disruptions or changes in inventory management efficiency. The dip around mid-2020 and the peak processing days in 2022 may indicate challenges impacting inventory flow. The gradual recovery in turnover and reduction in processing time towards 2024 and 2025 suggest improving operational efficiency or adaptation to external conditions. Continuous monitoring is advisable to ensure trends maintain positive momentum.

Receivables Turnover Ratio

The receivables turnover ratio data starts from August 31, 2019, with an initial value of 9.16. In the following periods, the ratio demonstrates fluctuations around this level, notably peaking at 13.61 on August 31, 2020, which indicates a significant improvement in turnover efficiency during that quarter. Subsequent values mostly remain between 9.0 and 12.5, showing moderate variability but no clear long-term trend either upward or downward. The ratio recorded values around 10 to 11 in the most recent quarters, ending at 10.65 on February 28, 2025. Overall, the ratio suggests that the company has maintained a relatively stable ability to collect its receivables efficiently, with occasional improvements.

Average Receivable Collection Period (Days)

The average collection period inversely corresponds to the receivables turnover ratio and starts from 40 days at August 31, 2019. A notable decrease to 27 days occurred on August 31, 2020, reflecting faster collection during that period, which aligns with the peak receivables turnover ratio observed in the same timeframe. Afterward, the days generally fluctuate between 29 and 40 with occasional increases to 38 and 40 days, suggesting some inconsistency in collection speed but no escalating trends. The most recent figure, 34 days on February 28, 2025, indicates a moderate collection period consistent with historical averages.

Summary of Trends and Insights

The data signals that the company's receivables management has been relatively stable over the observed period. The quarter with the highest receivables turnover corresponded with the shortest collection period, indicating efficient cash flow management at that time. Despite fluctuations, the turnover ratio and collection period have largely remained within a consistent range without evidence of deterioration or significant improvement. This stability in receivables performance suggests effective credit control policies and consistent customer payment behavior throughout the periods analyzed.

The data reveals fluctuations in key operational metrics over successive quarters, specifically focusing on the average inventory processing period, average receivable collection period, and the overall operating cycle.

Average Inventory Processing Period

This metric, representing the time inventory remains before sale, exhibits variability across the timeline. Early data points indicate a period around the mid-90s to low 100s in days. A notable increase occurred in the quarters around August 2020, peaking at 127 days, reflecting possible inventory management adjustments or supply chain impacts. Subsequently, the period shows a decline with intermittent rises, settling near early data levels toward the latest reported quarters. The highest values suggest times of slowed inventory turnover, which could impact working capital efficiency.

Average Receivable Collection Period

The receivable collection period remains relatively stable, generally oscillating between 27 to 43 days. A dip to 27 days occurred around August 2020, indicating quicker collection possibly influenced by credit policy changes or customer payment behavior. Later periods show some increase back to the higher 30s and low 40s, indicating modest fluctuations in how long receivables are outstanding. The variations are moderate, suggesting consistent receivables management with slight responsiveness to operational or market conditions.

Operating Cycle

The operating cycle, combining inventory and receivables periods, reflects overall cash conversion time. It demonstrates a pattern of rising from approximately 135 days in mid-2019 to a peak near 175 days in late 2021, corresponding to extended inventory periods and stable receivables. This elongation indicates longer cash tied up in operations, potentially affecting liquidity. After this peak, the operating cycle gradually shortens, returning to near earlier levels by the last quarters observed. This trend suggests a recovery or optimization in operational efficiency post the period of increased operational durations.

In summary, the data points to periods of increased inventory holding times leading to an extended operating cycle, especially evident around 2020 to 2022, likely reflecting external or internal challenges. The receivable collection period remained comparatively steadier. Overall, the operating cycle’s rise and subsequent decline imply phases of operational adjustment with a recent trend toward improved efficiency in cash flow management.

Payables Turnover Ratio

The payables turnover ratio exhibits significant variability across the periods analyzed. Beginning from August 31, 2019, at 8.29, the ratio generally fluctuates between approximately 7.5 and 12.3 over the subsequent years. Notable peaks occur in May 2021 (11.84) and February 2024 (12.28), indicating periods when the company was efficiently managing its accounts payable by paying its suppliers more frequently. Conversely, troughs around May 2022 (7.51) and August 2022 (7.64) suggest slower payments during these intervals. Overall, the ratio does not establish a clear upward or downward long-term trend, but rather reflects alternating cycles of faster and slower payments.

Average Payables Payment Period (Days)

The average payables payment period, reflecting the typical number of days the company takes to pay its suppliers, shows an inversely proportional pattern to the payables turnover ratio as expected. Starting at 44 days in August 2019, it notably declines to as low as 30 days by May 2024, with intermittent increases, such as peaks near 49 days in August 2022 and 48 days in November 2022. These fluctuations imply changes in payment policies or cash management strategies over time. Generally, the later periods tend toward a shorter payment period relative to some earlier peaks, suggesting an overall trend of improving payment efficiency toward the most recent data points.

Relationship and Insights

The inverse relationship between the payables turnover ratio and the average payment period is consistent throughout the data, confirming the typical financial dynamic: as the turnover ratio increases, the payment period decreases and vice versa. The variability and oscillation between these metrics may reflect strategic adjustments in working capital management responding to operational needs or market conditions. The periods of higher payables turnover and reduced payment days could indicate stronger liquidity positions or more favorable credit terms. Conversely, extended payment periods and lower turnover might correspond to tighter cash flows or deliberate delays in payments to conserve cash.

The financial data indicates several notable trends regarding the company's working capital management over multiple periods from August 2018 through February 2025.

Average Inventory Processing Period

This metric shows variability with a general fluctuating trend over the timeline. Starting data from May 2019 shows an initial increase, peaking around August 2020 at 127 days. Subsequently, the period declines steadily, then rises again to a secondary peak near November 2022 at 137 days, before trending downward toward February 2025, settling around 102 days. The fluctuations suggest inconsistent inventory turnover efficiency, with periods of slower inventory processing affecting operational fluidity.

Average Receivable Collection Period

The average time to collect receivables exhibits moderate fluctuation but remains within a narrower band compared to inventory days. From May 2019 onward, there's a noticeable decline from 40+ days to a low of approximately 27 days in August 2020, indicating improved collections. Afterward, the period oscillates between roughly 30 and 40 days, showing some variability but maintaining generally efficient collection times through to early 2025.

Average Payables Payment Period

The payment period to suppliers varies over time, starting at approximately mid-40 days in mid-2019, then declining to lows near 30 days by late 2020. Thereafter, it climbs back to just under 50 days by November 2022 before gradually decreasing again to a range in the low 40s by early 2025. These movements imply varying supplier payment policies or cash management strategies, potentially balancing between extending payables to optimize liquidity and maintaining supplier relationships.

Cash Conversion Cycle (CCC)

The Cash Conversion Cycle fluctuates along with the components it aggregates. Initially around the low 90s (days), the CCC rises, peaking near 127 days in late 2022, indicating a longer cash-to-cash cycle which can constrain liquidity. Post peak, a progressive reduction is observable, with the cycle trending downward towards approximately 94 days by early 2025. This trajectory suggests some operational improvements, possibly through better inventory management and receivables collection or more efficient payables handling.

Overall, the data reflects a dynamic working capital profile with periods of efficiency gains and setbacks. The relatively high peaks in inventory processing and CCC in late 2020 and 2022 reveal focus areas for potential operational improvement. Receivables collection shows moderate stabilization, while payable management appears flexible, likely employed as a tool to manage liquidity. The gradual improvement in the CCC towards the end of the timeline suggests positive developments in the firm's cash flow management practices.