For Nike and Underarmor's current financial information: 1. Capital and Operating Leases. Read the debt and lease footnotes to determine whether the company uses leases. Does the company use leases? What types of assets are leased? What proportion of leases are capital (finance) versus operating? Are leases a substantial component of overall financing? Determine the discount rate implicit in the companys capital leases. Has the company adopted the new standard for leases? If not, use the rate from above to approximate the amount that would have been included in the balance sheet had the operating leases been capitalized. Is the missing amount economically important? Quantify the effect that capitalizing the operating leases would have on the following financial items and ratios for each company: return on equity (ROE), net operating profit after tax (NOPAT), net operating assets (NOA), and measures of financial leverage, liquidity, and solvency.

2. Pensions. (Complete #2 on Pensions only if the company has no capital leases) Read the pension footnote to determine whether the company has defined benefit obligations. What is the funded status of the pension and other benefits plans? Is the underfunded or overfunded obligation substantial? Compare between the companies. Are the plans substantial to the company? How much pension expense does each company report in its income statement? Is this a substantial amount? Compare the cash paid into the plan assets to the amounts paid to retirees. Assess the cash flow implications of the companys future payment obligations. The point is to determine whether the company will be able to meet its obligations as they come due.