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ACCT 6015 Project 1 S

Satisfactory Essays
ACCT 6015
PROJECT 1: UNDER ARMOUR

PRANIL BALRAM
NAZAR BASHAMOV
SAM LEE
MATT STIMSON
KEITA TAKARADA

18 NOVEMBER 2014
1. We chose to study Under Armour because of their explosive growth over the last five years in a very competitive industry. From a marketing standpoint, it is quite apparent that the company is doing well and one could assume that because the firm appears to have had great success in aggressively expanding their market share, they are by extension creating value for investors. By studying the financial information, we aimed to confirm or deny whether Under Armour is indeed creating value.

2. Under Armour is incorporated in Maryland

3. Under Armour is registered on the New York Stock Exchange as “UA”
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This gives an estimated cost of equity of 5.31%.

10. Based on a cost of equity of 5.31%, Under Armour created value in 2013 because the ROE (17.4%) is greater than the cost of equity (5.31%).

11. Accounts receivable turnover and days sales in accounts receivable for the last three years:

2013
2012
2011
ART
12.099
11.855
12.476
Calculation

Days SAR
30.166
30.789
29.256
Calculation

12. Inventory turnover and days in inventory for the last three years:

2013
2012
2011
IT
3.033
2.969
2.185
Calculation

Days Inv
120.35
122.93
129.64
Calculation

13. Accounts payable turnover and days in accounts payable for the last three years:

2013
2012
2011
APT
7.733
7.826
8.205
Calculation

Days AP
47.198
46.639
44.483
Calculation

14. Cash conversion cycle for the last three years:

2013
2012
2011
Cash CC
103.318
107.08
144.413
Calculation
120.35 + 30.166 – 47.198 = 103.318
122.93 + 30.789 - 46.639 = 107.08
129.64 + 29.256 - 44.483 = 144.413
There is a downward trend in cash conversion, which is a good indicator that management is doing a better job of balancing enough inventory for customers, while receiving money quickly in order to pay suppliers. We would want to compare Under Armour’s cash conversion cycle across the industry to determine whether 100+ days is good.

15. Percent change in common stockholder’s equity over the last four years:

Year
2010
2011
2012
2013
Common Equity
$496,966
$636,432
$816,922
$1,053,354
Percent Change
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