Under Armour, Inc.

UnderArmour, Inc.

UnderArmour Inc.

UnderArmour Inc. is an enterprise that was incorporated in Maryland in1996. The principal activity for Under Armour is the development,marketing, and distribution of branded sports apparel, footwear, andaccessories for all gender and age. The corporation is publiclytraded on the NYSE, and the business operation is in four geographicsegments with representation in 16 countries outside the UnitedStates. Kelvin Plank is the founder of the company and also serves asthe company CEO and president, and the company has an approximately13400 employees as of December 31, 2015.

QuestionOne

UnderArmour Inc. operates in the sports apparel industry which iscompetitive and growth is rapid. The industry is fragmented andincludes new competitors and established entities. Substantialpricing pressure is common in the sports apparel industry and iscaused by factors such as competition, the pressure to reduce productcosts and changes in demand by the consumer. The industry ischaracterized by the need for a substantial sum of capital that isfinancial and human to develop, produce and market affordable andquality sports apparels. Suppliers in the industry sell materials tocompeting companies with varying prices depending on the size of theentity.

Someof the current developments in Under Armour Inc. include

  1. An announcement on the plan to open an E-commerce distribution in Maryland

  2. An announcement with Sport Chek on the search for the top youth athletes in Canada.

  3. The opening of UA Lighthouse Manufacturing and Design Leadership Center in the corporation hometown of Baltimore.

  4. An announcement on the final ratio for Class C stock dividends.

  5. The launch of a UA shop with the aim of expanding the connected fitness suite which gives shoppers a personalized shopping experience.

  6. The change of the senior management team encapsulated by Henry Stafford, the Chief Merchandising Officer decision to leave the corporation after six years of service.

UnderArmour projects that the net revenues for 2016 will be around $4.925billion, representing a progression of 24% over the revenues reportedin 2015. The entity expects the net income will range between $440million and $445 million which represent 8% to 9% over 2015. Thecompany below the activity line anticipates that the interest expensewill be in the region of $32 million and 448 million for the fullyweighted average shares outstanding. Under Armour expects to find newopenings that bring into the fold more consumers through captivatingflagship retail, new wholesale partners, and an engaging digitalplatform.

QuestionTwo

UnderArmour Notes to the Audited Consolidated Financial Statementsdescribes additional information on the annual reports. The notesindicate the details and supplementary information missing from thekey financial documents. The presentation is done to enhance claritybecause the notes are quite long, and if included together with thecritical financial reports, they would cloud the data. The notes havevital information such as the policies in accounting used inrecording and reporting the transactions, details on retirement fundand compensation in stock options. The data have material effects inthe returns that the holders of ordinary stock anticipate from UnderArmour Inc.

QuestionThree

UnderArmour Inc. competitors include Nike and Adidas. The two companiesare larger than UA and have a stronger worldwide brand recognitionencapsulated with revenues of over $31 billion for Nike and over $16billion for Adidas compared to UA revenues of just under $4 billion.The information on identifying the UA competitors for financialperformance evaluation is essential because strategies are learnedand developed to improve competitiveness (Weygandt, Kimmel &ampKieso, 2015).&nbsp. Nike and Adidas are larger than UA thus havemore favorable costs per unit and a wider array of products. UA istherefore compelled to adopt practices adopted by the competitors forbetter financial performance.

QuestionFour

UnderArmour Inc. balance sheet is used to come up with the accountingequation. The equation accentuates that the UA assets are equal tothe combination of liabilities and shareholders’ equity. Theformula is described as

Assets= Liabilities + Shareholders Equity

Under Armour Inc.

Accounting equation

At end of December 2013, 2014 &amp 2015

In $ million

Year

A= C+L

C

L

2013

$1,577

$1,053

$524

2014

$2,095

$1,350

$745

2015

$2,869

$1,668

$1,201

Assetsand liabilities articulate the assessment on whether Under ArmourInc. financial strength is strong or weak. If UA assets are more thanliabilities, it is a good sign because the company can pay up thedebt. If the liabilities are more than the assets, the financialstrength is weak.

C=A-L

A

L

Comment

2013

$1,053

$1,577

$524

Strong

2014

$1,350

$2,095

$745

Strong

2015

$1,668

$2,869

$1,201

Strong

UnderArmour Inc. financial condition looks healthy for the fiscal years2013, 2014 &amp 2015. The fiscal year 2015 was the best with theassets exceeding liabilities by $1,668 million.

QuestionFive

UnderArmour Inc. result from operations is represented by subtracting theexpenses incurred during operations from the revenues. The net incomedescribes the result from the operation. The net income for thefinancial year ended December 2013 was $162.33 million. An increasein net income is good news for the company and the shareholder. Anincrease is good to the enterprise because it signifies that thecompany was more efficient in activities undertaken. An increase innet income is good news to the shareholder because the returns fromthe stock also increase.

QuestionSix

Retainedearnings articulate the percentage of Under Armour Inc. net earningsthat has not been distributed as dividends but retained forreinvestment or pay the debt. The retained earnings for Under Armourfor the financial year 2013 which represent an accumulation of somefiscal years was $653.8 million. The increase in the retainedearnings for the fiscal year 2013 was because of the addition of theyear 2013 comprehensive income of $162.33 million.

QuestionSeven

Theconsolidated statement of cash flows for Under Armour Inc. reportsthe cash and cash equivalents. The amounts in UA cash flow statementin the financial report describe whether the cash equivalentsincreased or (decreased) during the fiscal year 2013. The amounts forthe year heightens an increase of cash equivalent by $5.6 million.Three key activities caused UA cash and cash equivalent to a changein the period ended 2013. The activities include operating whichprovided $120 million, investing used $238 million, financingprovided $126.8 million, and effect on the exchange rate on the cashand cash equivalent used $3.1 million.

Conclusion

Thepaper carries out research on Under Armour Inc. financial statementsand analyzes the information included. The document describes theindustry UA operates and the subsequently evaluates the operations ofthe business. The paper also identifies the competitors and assessesthe importance in assessing the financial performance of theenterprise. The paper further evaluates the four key auditedfinancial statements hence providing an adequate presentation.

References

Weygandt,J. J., Kimmel, P. D., &amp Kieso, D. E. (2015).&nbspFinancial&amp Managerial Accounting.John Wiley &amp Sons.