Bethany Crowder

MBE 203

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Table of ContentsThe Company…………………………………………………….. 3

Current Activities………………………………………………… 3

Income Statement Analysis………………………………….. 5

Balance Sheet Analysis………………………………………… 7

Ratio Analysis……………………………………………………. 8

Memo to the Interview Team………………………………… 9

Appendix…………………………………………………………… 10

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The Company

The company being analyzed in this report is Under Armour.

(https://www.underarmour.com/en-us/)

Under Armour’s mission statement is “To make all athletes better

through passion, design and the relentless pursuit of innovation.”

(http://investor.underarmour.com/company/mission.cfm)

Current Activities

Under Armour is Expanding its Smart Shoe Range

In February, Under Armour released a single smart shoe product called

the Under Armour SpeedForm Gemini 2 RE. As other players such as

Nike and Addidas get involved in the smart shoe market, Under Armour

has developed a new range of smart shoes to start their 2017 off with

a bang. All of these smart shoes will connect to Under Armour’s

MapMyRun application. Under Armour has also expanded their app to

pair with their new shoes. The app will now feature the Jump Test,

which “scientifically measures and elevates the awareness of an

athlete’s muscular fatigue level.” (Under Armour) The app changes and

new footwear line will be available for pre-order in early January.

(http://footwearnews.com/2016/focus/athletic-outdoor/under-armour-

record-equipped-running-sneakers-release-mapmyrun-app-285503/)

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Under Armour signs Deal to Supply MLB Uniforms

Under Armour scored a major deal becoming the official outfitters of

Major League Baseball starting in 2020. Teams will wear the Under

Armour logo on the right side of their chest. Kevin Plank, CEO and

founder of Under Armour explains his excitement for the partnership of

two terrific brands. The deal will last Under Armour 10 years and

Fanatics Inc., an online retailer, will also sell their apparel. Under

Armour has been focusing on sponsoring individual athletes, but this is

the first time they will sponsor an entire sport.

(http://www.wsj.com/articles/under-armour-signs-deal-to-supply-mlb-

uniforms-1480949843)

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Income Statement Analysis

Under Armour could be considered a retailer and a manufacturer.

This is possible because Under Armour sells their own products online

as well as in their own retail locations, but Under Armour also

manufactures and distributes their products to many other retailers

and wholesalers. Their fiscal year ends on December 31st, which is

common considering it is the last day of a calendar year. It also makes

sense because Under Armour sells tangible goods and from Black

Friday until the end of December revenue is very high so the company

is able to finish out their year strong. Net sales are the total amount of

revenue made subtracting the sales discounts and sales returns, but

not yet subtracting what it cost to make the product. Cost of goods

sold is the cost to make the product that is being sold. When you

subtract cost of goods sold from net sales then gross profit is found.

Under Armour has cost of goods sold on their income statement

because they’re selling a tangible good. Under Armour’s income

statement in their 10k filing is a multi-step income statement. It

continues to go on after gross profit by finding the operating income as

well as the net income by subtracting expenses. Under Armour is a

pretty large producer of sportswear. The company is very large. Their

sales revenue for 2015 is $3,963,313,000 or three billion nine hundred

and sixty three million three hundred and thirteen thousand dollars.

Sales increased from the end of the year in 2014 to the end of the year

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in 2015 by 28.5%. This number was found using the NOO formula.

Net income increased from the end of the year in 2014 to the end of

the year in 2015 by 12%. This number was found using the NOO

formula. Under Armour does show their earnings per share on their

financial section of their 10k annual report and in 2015 that number

was $1.08. Companies show this number to show shareholders that

they are making money on their investments. The relevance from the

articles analyzed earlier and the company’s financial results directly

correlate as the company comes out with a new line on smart shoes

available for pre-sale in January. The other article talks about Under

Armour’s deal with MLB, which will also bring in revenue. This is a

good thing because it can expand their user base, which would end up

making the company more money.

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Balance Sheet Analysis

Under Armour does sell on credit because their balance sheet contains

an account receivables line of $433,638,000. There is not an

allowance account on their balance sheet. An allowance account

would be to use on the accounts receivable if some of these customers

can’t by. It would be written off as a bad debt expense, which is

covered by the company’s allowance account. Under Armour does buy

on credit because they have an accounts payable account of

$200,460,000. Inventory is the goods that a company has in stock that

they can sell for a profit. Under Armour has inventory on their balance

sheet totaling $783,031,000. Under Armour’s balance sheet does

show a “property and equipment” line, but there is no line specifically

for accumulated depreciation. This is because the property and

equipment line shows the word “net” at the end. Accumulated

depreciation is the value that decreases from equipment after use,

which continues to add up until it is essentially valueless. Common

stock is a common shares held in the company. Their par value is

$0.0003 or 1/3. They do have an additional paid in capital account of

$636,630,000. There is a retained earnings account. Retained

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earnings are what the company keeps from stock earnings and the

account for Under Armour totals $1,076,533,000. This account is much

larger than other accounts on their balance sheet.

Ratio Analysis

Using the formula net income/sales revenue (232,573/3,963,313),

Under Armour’s net profit margin is roughly 5.8%. This means that the

company makes about 5.8% of their sales revenue number in profit.

The net profit margin for Under Armour is decent, but it could be

better. Using the formula current assets/current liabilities

(1,498,763,000/478,810,000), Under Armour’s current margin is

roughly 3.1%. This is a good margin because the company has a high

value of current assets than current liabilities. Using the formula total

liabilities/total assets (1,200,678,000/2,868,900,000), Under Armour’s

bad debt ratio is about 4.2%. This means that they’re liabilities

account is now out of control and that they have a higher amount of

total assets. This is a good bad debt ratio.

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Memo to the Interview Team

To: Interview Team

Date: December 16th, 2016

Re: My Decision About The Training Program

Good Afternoon,

After consideration I would like to accept the position in Under

Armour’s management training program. Under Armour has

always been a company that I have admired for their innovation.

The new smart shoe line and app extension are the perfect

examples of Under Armour’s continuous innovation. It would be

an honor working for such a successful company as Under

Armour’s sales revenue has increased every year. Under

Armour’s new deal with MLB is something I am very interested in

being a part of. The deal will increase online sales as well as

expand user platform of Under Armour merchandise. The way

Under Armour communicates with shareholders about their

investments is something that I truly admire. I am pleased to

own stock in Under Armour and receive dividends from this

amazing company.

Thank you for this incredible opportunity,

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Bethany Crowder

Appendix A

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Appendix B

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