Under Armour, Inc., is an American supplier of sportswear and casual apparel. Following are selected financial data for the company for the period 2009–2013.

2009 2010 2011 2012 2013 Profit margin (%) 5.5 6.4 6.6 7.0 7.0 Retention ratio (%) 100.0 100.0 100.0 100.0 100.0 Asset turnover (X) 1.6 1.6 1.6 1.6 1.5 Financial leverage (X) 1.7 1.7 1.9 1.8 1.9 Growth rate in sales (%) 18.1 24.2 38.4 24.6 27.1 Source: Data from Under Armour 2009–2013 annual reports

a. Calculate Under Armour’s annual sustainable growth rate for the years 2009 through 2013.

b. Did Under Armour face a growth management challenge during this period? Please explain briefly.

c. How did Under Armour cope with this challenge?

d. Calculate Under Armour’s sustainable growth rate in 2013 assuming a profit margin of 8.0%. Return the profit margin to its original value and calculate the sustainable growth rate in 2013 assuming a financial leverage of 2.40 times. Calculate the sustainable growth rate in 2013 assuming both of these changes occur. LO.1