Financial Analysis Case 1 - Under Armour

Now that we have completed the textbook, let's put the analytical skills you learned in chapter 5 to use.

Search Google or any other search engine to help you better understand business at Under Armour.

Then read Under Armour 2016 Annual Report, found in this Module.

As the Chief Financial Officer at Under Armour, what are your recommendations to improve the financial health of the company? Discuss at length. Be thorough in your analysis and write-up.

Part one is you analytics. Your analysis must begin with a horizontal analysis and a common size analysis. Please see the document in the module "Analytics Suggested Format" for your pattern. Then calculate the ratios from the liquidity, activity, leverage, profitability and stock market groups of ratios, as outlined in our chapter.

Part two is your Write-up. Your case write-up needs to be a Word document. Please see the document in the module "Write-up Suggested Guidelines" "Please submit your Excel or Word files in Canvas. Photos are not accepted.

Under Armour Inc. Horizontal Analysis - Income Statement Suggested Format Following is the start for you to follow. You are to complete this. You do not need to include the "Per Share" data. Net Revenues Cost of Goods Sold 2014 3,084,370 1,572,164 2015 3,963,313 2,057,766 % Change 28.5% 30.9% 2016 4,825,335 2,584,7241 % Change 21.8% 25.6% =Gross Profit 1,512,206 Sell, Gen & Admin Exp 1,158,251 Operating Income Interest Expense Other Expense -Income before taxes Income Taxes Net Income Under Armour Inc. Horizontal Analysis - Balance Sheet Suggested Format List every line on their balance sheet. Do all the assets, liabilities and equity. Following is the start for you to follow. This not the complete listing. You are to complete this. 2015 2016 % Change 250,470 92.9% Assets Cash & Equivalents Accounts Receivable Inventories Prepaid Expense & Other Total Current Assets Property & Equipment Goodwill Intangible Assets Deferred Income Taxes Other Long Term Assets Total Assets 129,852 433,638 783,031 152,242 1,498,763 538,531 585,181 75,686 92,157 75,652 2,865,970 Liabilities You Need to Complete Under Armour Inc. Horizontal Analysis - Income Statement Suggested Format Following is the start for you to follow. You are to complete this. You do not need to include the "Per Share" data. 2014 3,084,370 1,572,164 2016 4,825,335 Net Revenues Cost of Goods Sold 2015 3,963,313 100.0% 2.057,766 51.9% 100.0% 100.0% 51.0% =Gross Profit 1,512,206 49.0% Sell, Gen & Admin Exp =Operating Income Interest Expense Other Expense =Income before taxes Income Taxes Net Income 0 Under Armour Inc. Horizontal Analysis - Balance Sheet Suggested Format List every line on their balance sheet. Do all the assets, liabilities and equity. Following is the start for you to follow. This nor the complete listing. You are to complete this. 2015 2016 250,470 6.9% Assets Cash & Equivalents Accounts Receivable Inventories Prepaid Expense & Other Total Current Assets 129,852 433,628 783,031 152.242 1.498,763 4.5% 15.1% 27.3% Defered Income Taxes Property & Equipment Goodwill Intangible Assets Deferred Income Taxes Other Long Term Assets Total Assets 538,531 585,181 75.686 92,157 75,652 2,865,970 100.0% 3,644.331 100.0% Liabilities You Need to Complete Under Armour Inc. Ratio Analysis Suggested Format - This is a complete list unless you want to add additional ratios. a 2015 2016 Liquidity Ratios Current Ratio Quick Ratio Cash Flow Liquidity Ratio Activity Ratios Acct Receivable Turnover Days Sales Outstanding Inventory Turnover Acct Payable Turnover Days Payable Outstanding Leverage Ratios Debt Ratio Debt to Equity Times Interest Earned Profitablity Ratios Gross Profit Margin Operating Profit Margin Net Profit Margin Cash Flow Margin Return on Total Assets Return on Equity Market Ratios Earning per Share Price to Earnings Ratio Dividend Yield Under Armour Inc. Summary Cash Flow Suggested Format Be sure to make it clear whether cash increased or decreased in each activity 2015 2016 Beginning Cash NetCash Flow from Operating Activities Net Cash Flow from Investing Activites Net Cash Flow from Financing Acitivites Cash Ending Balance Elements of Your Financial Analysis Write-Up Your write-up needs to address each the following area, Plainly label each section. Support your observations with numbers from your ratios or directional (horizontal & vertical) financial statements. For example, if long term debt increased, what caused it? Do you see an increase in property & equipment? Has the interest expense increase? Has depreciation jumped significantly? Sales Growth - Are Net Sales Growing? Are there any divisions or product lines growing? Does the annual report give any indication about the reason(s) for this? Does your directional analysis (horizontal or vertical) bear this out? Can we see the sales increase in the inventory tumover ratio? Cost Control - are expenses in line with the change in net sales? Look at the levels of costs including cost of goods sold, marketing expenses. and administrative expenses. Look at the COGS% change and the SGA% (selling, general & administrative expenses) changes. Again, support your observation with your directional analysis and/or ratios, Profitability - Look at the three levels of profits: gross margin, operating profit and net income. How are they changing from year to year as a percentage of sales (vertical analysis)? Cash Flow and Liquidity - Is cash increasing or decreasing. Does that make sense in light of the profits? What about the liquidity ratios? Did you find a change in the current or the quick ratio? Look at the cash flow statements. Is operations generating or consuming cash? Is the growth of inventory reasonable as compared to the growing of cost of goods sold? Look at the accounts payable tumover ratio. And don't forget about accounts receivable and its change. Are you concerned with changes in the accounts receivable tumover ratio? Debt Levels - Is debt increasing or decreasing? Looks at the change in current and long-term liabilities in your directional analyses. What are the reasons for this change? Look at your debt ratios. Is there anything in annual report or outside articles to explain a significant change in debt, if you find one? Equity and Stock Market Factors - Has common stock plus the paid in capital on common stock increased? Has it decreased from a buyback of common stock (treasury stock)? What about the price of the stock, has it changed significant over the years of your analysis. Look at the price to eamings ratio and the dividend yield ratio. Do not put a lot of marketing promotional information into your write- up. If the MD&A from the annual report discussed marketing problems that help explain the financials, that would be useful. DO NOT cut and paste someone else's financial statements and ratios. The point of the exercise is for you to select the numbers and do the math Put your name and every document you submit, in addition to the proper heading for each document, Be sure to consider the outside article information that you find. It may give you insights into why the financial statements are changing. Before you compare the company to its competitors, look at the trends for the company in the financial area In each of the area give you oninion regandine potential problems you