Economic Value Added (EVA)
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Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
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Nike Inc. pages available for free this week:
- Statement of Comprehensive Income
- Common-Size Balance Sheet: Assets
- Analysis of Solvency Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Debt to Equity since 2005
- Total Asset Turnover since 2005
- Price to Earnings (P/E) since 2005
- Analysis of Revenues
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Economic Profit
Nike Inc., economic profit calculation
US$ in millions
| 12 months ended: | May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | |
|---|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | |||||||
| Cost of capital2 | |||||||
| Invested capital3 | |||||||
| Economic profit4 | |||||||
Based on: 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes generally experienced a significant increase from 2,477 million USD in 2020 to a peak of 5,557 million USD in 2022. However, after this peak, NOPAT exhibited a declining trend, dropping to 2,913 million USD by 2025. This suggests a reduction in operating profitability in the more recent periods following strong performance earlier in the timeline.
- Cost of Capital
- The cost of capital remained relatively stable throughout the period, fluctuating slightly between approximately 14.6% and 15.8%. Despite minor variations, there was no substantial upward or downward trend, indicating a consistent baseline for the company’s required rate of return.
- Invested Capital
- Invested capital demonstrated overall moderate growth from about 19,083 million USD in 2020 to a high of 22,129 million USD in 2024. However, it then declined to 19,883 million USD in 2025, reflecting a contraction after years of accumulation. This pattern suggests a possible divestment or reduction in asset base towards the end of the period.
- Economic Profit
- Economic profit showed notable volatility. Starting with a negative value of -324 million USD in 2020, it improved significantly to a positive peak of 2,397 million USD in 2022. Following this, economic profit decreased, turning negative again to -231 million USD by 2025. This trend indicates that the company generated substantial value above its cost of capital in the middle years, but faced challenges to maintain this value creation in the later years.
- Summary
- Overall, the data portrays a company that achieved strong operational profitability and economic profitability gains up to 2022, supported by rising invested capital. Yet, stability appears to have weakened thereafter, with declines in profitability and economic profit accompanied by a reduction in invested capital. The cost of capital remained steady, underscoring that changes in value generation are primarily driven by performance and capital deployment rather than shifts in funding costs. These observations suggest a phase of intense growth and value creation, followed by recent profitability pressures and asset base adjustments.
Net Operating Profit after Taxes (NOPAT)
Nike Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for uncollectible accounts receivable.
3 Addition of increase (decrease) in equity equivalents to net income.
4 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
5 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
6 Addition of after taxes interest expense to net income.
7 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
8 Elimination of after taxes investment income.
- Net Income
- Net income shows a significant increase from 2,539 million USD in 2020 to a peak of 6,046 million USD in 2022. However, this is followed by a decline to 5,070 million USD in 2023. There is a partial recovery to 5,700 million USD in 2024 before a sharp decrease to 3,219 million USD in 2025. Overall, net income demonstrates strong growth until 2022, but subsequent years indicate volatility and a downward trend by the final year.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibits a similar pattern to net income, increasing from 2,477 million USD in 2020 to 5,557 million USD in 2022. After peaking, it declines to 5,013 million USD in 2023 and slightly improves to 5,146 million USD in 2024. However, in 2025, NOPAT decreases substantially to 2,913 million USD. This trend aligns closely with net income, illustrating parallel fluctuations in profitability after operating costs and taxes.
- Overall Trends and Insights
- Both net income and NOPAT show a growth phase peaking around 2022, followed by a period of decline and instability. The decrease in values in 2025 suggests challenges impacting profitability, potentially due to operational or market conditions. The close alignment between net income and NOPAT indicates consistent operational efficiency relative to income generation before the decline starts.
Cash Operating Taxes
Nike Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31).
- Income Tax Expense
- The income tax expense shows a fluctuating trend over the six-year period. It increased significantly from 348 million US dollars in 2020 to 934 million US dollars in 2021, followed by a decline to 605 million in 2022. However, it spiked again to 1,131 million in 2023 before gradually decreasing over the next two years, reaching 666 million in 2025. This pattern indicates volatility in the company's tax obligations, potentially influenced by changes in profitability or tax regulations.
- Cash Operating Taxes
- Cash operating taxes have generally trended upward from 764 million US dollars in 2020 to peak at 1,482 million in 2024. Notably, there was rapid growth between 2020 and 2021, and a stabilization phase followed with values remaining above 1,200 million until 2024. A decline is observed in 2025, dropping to 951 million. This suggests variations in operational cash tax payments, potentially reflecting changes in taxable income, tax planning strategies, or cash management.
- Comparative Insight
- Comparing income tax expense with cash operating taxes reveals some divergence in trends. While income tax expense is more volatile with pronounced peaks and troughs, cash operating taxes show a more gradual rise and fall. This might indicate differing timing or recognition of tax liabilities versus actual cash outflows related to taxes over the years.
Invested Capital
Nike Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of equity equivalents to shareholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of construction in process.
7 Subtraction of short-term investments.
- Total reported debt & leases
- The total reported debt and leases demonstrate a consistent downward trend over the observed period. Starting at 13,015 million US dollars at the end of May 2020, the figure gradually decreases each year, reaching 11,018 million US dollars by May 2025. This reduction suggests a strategic effort toward lowering financial leverage or refinancing liabilities on possibly more favorable terms.
- Shareholders’ equity
- Shareholders' equity exhibits considerable growth from May 2020 through May 2022, increasing from 8,055 million to a peak of 15,281 million US dollars. However, post-2022, equity experiences a slight decline, settling at 13,213 million by May 2025. The initial increase may indicate retained earnings accumulation or capital infusions, while the subsequent decrease might reflect distributions such as dividends, share repurchases, or changes in retained earnings.
- Invested capital
- Invested capital shows a fluctuation pattern throughout the period observed. Starting at 19,083 million in May 2020, it rises to a high of 22,129 million by May 2024 before decreasing to 19,883 million in May 2025. This variability could be due to changes in operational asset base, capital expenditures, or working capital adjustments, indicating shifts in investment strategies or business cycles.
Cost of Capital
Nike Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Short-term borrowings and long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-05-31).
1 US$ in millions
2 Equity. See details »
3 Short-term borrowings and long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Short-term borrowings and long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-05-31).
1 US$ in millions
2 Equity. See details »
3 Short-term borrowings and long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Short-term borrowings and long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-05-31).
1 US$ in millions
2 Equity. See details »
3 Short-term borrowings and long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Short-term borrowings and long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-05-31).
1 US$ in millions
2 Equity. See details »
3 Short-term borrowings and long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Short-term borrowings and long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-05-31).
1 US$ in millions
2 Equity. See details »
3 Short-term borrowings and long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Short-term borrowings and long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-05-31).
1 US$ in millions
2 Equity. See details »
3 Short-term borrowings and long-term debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Nike Inc., economic spread ratio calculation, comparison to benchmarks
| May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | |||||||
| Invested capital2 | |||||||
| Performance Ratio | |||||||
| Economic spread ratio3 | |||||||
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| lululemon athletica inc. | |||||||
Based on: 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit exhibited significant fluctuations over the observed periods. Initially, it was negative in May 31, 2020, at -324 million USD, indicating a loss. Subsequently, there was a considerable improvement with a strong positive trend reaching a peak of 2,397 million USD by May 31, 2022. However, after this peak, economic profit declined to 1,958 million USD in 2023 and further to 1,912 million USD in 2024, showing a weakening profitability trend. By May 31, 2025, economic profit fell sharply into negative territory again, registering -231 million USD, suggesting recent operational or market challenges.
- Invested Capital
- The invested capital showed moderate changes over the reported periods. It increased from 19,083 million USD in 2020 to a high of 22,129 million USD in 2024, reflecting continued capital investment or acquisitions. However, in 2025, invested capital declined to 19,883 million USD, which may indicate asset disposals, decreased capital investment, or operational restructuring.
- Economic Spread Ratio
- The economic spread ratio, indicative of the return on invested capital relative to its cost, reflected a similar pattern to economic profit. Starting from a negative ratio of -1.7% in 2020, it improved dramatically to a high of 11.34% by 2022. Following the peak, there was a gradual decrease through 2023 and 2024, settling at 8.64%. The ratio then sharply declined to -1.16% in 2025, consistent with the negative economic profit reported in the same period and suggesting reduced efficiency in generating returns above the cost of capital.
- Overall Trends and Insights
- The overall financial pattern demonstrates recovery from initial losses, peaking in profitability and efficiency around 2021-2022. However, the recent data indicate a downturn with both economic profit and economic spread turning negative again by 2025, despite relatively stable invested capital levels. This signals a concern regarding operational performance, cost structure, or market conditions that may have increased costs or reduced revenues, leading to diminished value creation in the latest period.
Economic Profit Margin
Nike Inc., economic profit margin calculation, comparison to benchmarks
| May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | |||||||
| Revenues | |||||||
| Performance Ratio | |||||||
| Economic profit margin2 | |||||||
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| lululemon athletica inc. | |||||||
Based on: 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
- Revenues
- Revenues exhibited a consistent upward trend from 37,403 million US dollars in 2020 to a peak of 51,362 million US dollars in 2024. However, in 2025, there was a notable decline in revenues to 46,309 million US dollars, indicating a potential contraction or market challenge in that fiscal year.
- Economic Profit
- The economic profit experienced significant volatility over the analyzed period. Starting with a negative economic profit of -324 million US dollars in 2020, the company saw a substantial improvement in 2021 and 2022, reaching a high of 2,397 million. This positive momentum declined slightly in 2023 and 2024 but remained strong compared to early years. In 2025, economic profit reverted to a negative figure of -231 million US dollars, demonstrating a marked downturn from previous years and possibly reflecting increased costs, lower profitability, or external economic pressures.
- Economic Profit Margin
- The economic profit margin showed a similar pattern to economic profit, starting negative at -0.87% in 2020. It sharply improved to above 5% in 2021 and 2022, signifying strong profitability relative to revenue. Margins decreased in 2023 and 2024 to approximately 3.7-3.8%, indicating a reduction in efficiency or increased expenses relative to revenue. By 2025, the margin turned negative again (-0.5%), corroborating the decline in economic profit and suggesting a contraction in economic profitability relative to sales.
- Overall Observations
- The company experienced significant growth in revenue and profitability from 2020 to 2022, followed by signs of weakening economic performance in 2023 and 2024. The negative economic profit and margin in 2025, despite relatively high revenue, suggest challenges in cost management or competitive pressures impacting profitability. This volatility indicates a period of financial instability or strategic realignment that may require attention to return to sustained positive economic profitability.