Retrieve the 2016 Under Armour financial statements at www.sec.gov by clicking on Filings and then searching for “Under Armour” under Company Filings. When you see the list of filings for the company, select the Form 10-K for 2016. Be sure to retrieve the 2016 financial statements, not another year. Show amounts in millions and round to the nearest $1 million.

Requirements

1. Three important pieces of inventory information are

(a) The cost of inventory on hand,

(b) The cost of goods sold, and (c) the cost of inventory purchases. Identify or compute each of these items for Under Armour at December 31, 2016.

2. Which item in requirement 1 is most directly related to cash flow? Why? (Challenge)

3. Assume that all inventory purchases were made on account and that only inventory purchases increased Accounts Payable. Compute Under Armour, Inc.’s, cash payments for inventory during 2016.

4. See Note 2 Summary of Significant Accounting Policies, Inventories section. How does Under Armour value its inventories? Which costing method does Under Armour use?

5. Did Under Armour’s gross profit percentage and rate of inventory turnover improve or deteriorate in 2016 (versus 2015)? Consider the overall effect of these two ratios. Did Under Armour improve its performance during 2016? How did these factors affect the net income for 2016? (Note: Under Armour’s inventories totaled $537 million at the end of fiscal 2014.) Round answers to three decimal places.