Under armour annual report 2015

Required Ratios for Project Submission

1. Earnings per Share of Common Stock

2. Current Ratio

3. Gross Profit Rate

Please include the names of your team members, the course, the date, your instructor's name, and the title for the project.
Profiles
Complete one paragraph, profiling each company's business, including information such as brief histories, where each company is located, number of employees, the products each company sells, and so forth. Please reference any websites that you used for the profiles on the Bibliography tab.
NIKE, Inc. designs, develops, markets, and sells athletic apparel, footwear, equipment, and accessories. NIKE's headquarters are in Beaverton, Oregon. They were founded in 1964 as Blue Ribbon Sports, Inc. but, in 1971, they changed their name to NIKE, Inc. According to Yahoo! Finance, NIKE has 76,700 full-time employees. NIKE is known for their celebrity endorsements including basketball icon, Michael Jordan. NIKE had 2014 net product sales of $27.8 billion.
Under Armour, Inc. develops, markets, and distributes performance apparel, footwear, and accessories. Under Armour was founded in 1996 and is headquartered in Baltimore, Maryland. According to Yahoo! Finance, Under Armour has 7,000 full-time employees. Under Armour was founded by Kevin Plank, a former University of Maryland college football player. Under Armour had net product sales of $3.1 billion for 2014.
Ratios
Use this Excel spreadsheet to compute ratios; show your computations for all ratios on this tab, and also include your commentary.
The 2014 financial statements used to calculate these ratios are available in the Investor Relations sections of the Nikeand Under Armour websites.
NIKE Under Armour Interpretation and comparison between the two companies' ratios (reading Chapter 13 will help you prepare the commentary)
5/31/14 12/31/14 The comparison of the ratios is an important part of the project. A good approach is to briefly explain what the ratio tells us. Indicate whether a higher or lower ratio is better. Then compare the two companies on this basis. Remember that each ratio below requires a comparison.
Earnings per Share of Common Stock (basic - common) As given in the income statement $ 3.05 $0.98
Current Ratio Current assets $13,696 = 2.72 $1,549,399 = 3.67
Current liabilities $5,027 $421,627
Gross Profit Rate Gross profit $12,446 = 44.8% $1,512,206 = 49.0%
Net sales $27,799 $3,084,370
Profit Margin Net income $2,693 = 9.7% $208,042 = 6.7%
Net sales $27,799 $3,084,370
Inventory Turnover Cost of goods sold $15,353 = 4.1 $1,572,164 3.1
Average inventory $3,716 $502,860
Days in Inventory 365 days 365 = 88 365 = 117
Inventory turnover 4.1 days 3.1 days
Accounts Receivable Turnover Net credit sales $27,799 = 8.5 $3,084,370 = 12.6
Average net accounts receivable $3,276 $244,894
Average Collection Period 365 days 365 = 43 365 = 29
Accounts receivable turnover 8.5 days 12.6 days
Asset turnover Net sales $27,799 = 1.54 $3,084,370 = 1.68
Average total assets $18,070 $1,836,412
Return on Assets (ROA) Net income $2,693 = 14.9% $208,042 = 11.3%
Average total assets $18,070 $1,836,412
Debt to assets ratio Total Liabilities $7,770 = 41.8% $744,783 = 35.5%
Total Assets $18,594 $2,095,083
Times-Interest Earned Ratio Net income + interest expense + income tax expense $3,577 = 108.4 347,545 = 65.1
interest expense $33 5,335
Dividend Yield Dividend per share of common stock (Yahoo Finance 12/24/2015) $1.28 = 2.0% $0.00 = 0.0%
(Please follow the Course Project instructions to calculate the current dividend yield.) Market price per share of common stock (Yahoo Finance 12/24/2015) $63.18 $81.20
Return on Common Stockholders' Equity (ROE) Net income - preferred dividends 2,693 = 24.6% 208,042 = 17.3%
Average common stockholders' equity 10,952.50 1,201,827.00
Free cash flow Net cash provided by operating activities minus capital expenditures minus cash dividends = $1,324 = $78,505
in millions in thousands
Price-Earnings Ratio Market price per share of common stock as of 5/30/2014 for Nike and 12/31/2014 for Under Armour $76.91 = 25 $67.90 = 69
(Please see the Course Project instructions for the dates to use for this ratio.) Earnings per share $3.05 $0.98
Summary
You all get the chance to play the role of financial analyst below. The summary should be a comparison of each company's performance for each major category of ratios listed below. Focus on major differences as you compare each company's performance. A nice way to conclude is to state which company you feel is the better investment and why.
Liquidity: NIKE has the advantage for the current ratio. NIKE has $3.05 in current assets for every dollar in current liabilities while Under Armour has only 98 cents in current assets for every dollar in current liabilities. NIKE has the advantage for the inventory turnover ratio, but Under Armour has the advantage for the accounts receivable turnover ratio. NIKE turns over its inventory 4.1 times to Under Armour's 3.1 times. Under Armour has the advantage for the accounts receivable turnover ratio as Under Armour collects on its receivables 12.6 times to Nike's 8.5 times.
Solvency: Under Armour has less debt than NIKE as evidenced by Under Armour's 35.5% debt-to-assets ratio as compared to NIKE's 41.8% debt-to-assets ratio. NIKE can cover its interest expense 108.4 times with income before interest and taxes, while Under Armour can only cover its interest expense 65.1 times with their income before interest and taxes. NIKE has free cash flow of $1.3 billion while Under Armour has $78.5 million in free cash flow.
Profitability: Under Armour has the advantage for the gross profit rate at 49% while NIKE has a 44.8% gross profit rate percentage. NIKE has the advantage for the profit margin ratio at 9.7% versus 6.7% for Under Armour. Under Armour has the advantage for asset turnover as they turn their assets 1.68 times to Nike's 1.54 times. NIKE has the advantage for both return on assets (ROA) and return on common stockholder's equity (ROE). NIKE has an ROA of 14.9% to Under Armour's 11.3%. NIKE also has the advantage for return on common stockholders' equity with an ROE of 24.6% to Under Armour's 17.3%.
Conclusion: Under Armour has less debt than NIKE as measured by the debt to assets ratio, but NIKE has a stronger current ratio and times-interest earned ratio. Regarding profitability, NIKE has the advantage for return on assets (ROA) and return on common stockholders' equity (ROE). For both a conservative investor and growth investor, NIKE looks like the better choice.
Bibliography
Your textbook and any information that you use to profile the companies should be cited as a reference below.
Big Charts for Nike. (2014, May 30). Retrieved from http://bigcharts.marketwatch.com/historical/default.asp?symb=NKE&closeDate=5%2F30%2F14&x=0&y=0
Big Charts for Under Armour. (2014, December 31). Retrieved from http://bigcharts.marketwatch.com/historical/default.asp?symb=ua&closeDate=12%2F31%2F2014&x=37&y=26
Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2019). Financial Accounting: Tools for Business Decision Making (9th ed.). Hoboken, NJ: John Wiley & Sons, Inc.
Nike's 2014 Annual Report. (2014). Retrieved from https://s1.q4cdn.com/806093406/files/doc_financials/2014/index.html
NKE profile. (2019). Retrieved from https://finance.yahoo.com/quote/NKE/profile?p=NKE
NKE stock price. (December 24, 2015). Retrieved from https://finance.yahoo.com/quote/NKE/profile?p=NKE
Under Armour 2014 Annual Report. (2015). Retrieved from https://underarmourinc.gcs-web.com/static-files/13a42846-a519-469e-978b-b3199de9fbe8
UA profile. (2019). Retrieved from https://finance.yahoo.com/quote/UA/profile?p=UA&.tsrc=fin-srch
UA stock price. (December 24, 2015). Retrieved from https://finance.yahoo.com/quote/UA?ltr=1