Need answers to the case questions 1, 2, 3, and 4.

40 PARTI Pinance Basics are list listed EXHIBIT 2.2 Under Armour balance sheet. v REL A December 31. Under Armour, Inc. and Subsidiaries Consolidated Balance Sheets (in thousands, except share data) December 31 2014 2013 MEA the equi Not of 2 F DE RIS $ 593,175 $347.489 279.835 536,714 87.177 52,498 1,549,399 305,564 123,256 26,230 33,570 57,064 $2,095,083 $1,577,741 209.952 469.006 63,987 38,377 1,128,811 223,952 122,244 24,097 31,094 47,543 the ca FU te to t Assets A Current assets Cash and cash equivalents Accounts receivable, net Inventories Prepaid expenses and other current assets Deferred income taxes Total current assets Property and equipment, net Goodwill Intangible assets, net Deferred income taxes Other long term assets Total assets Liabilities and Stockholders' Equity Current liabilities Revolving credit facility Accounts payable Accrued expenses Current maturities of long term debt Other current liabilities @ Total current liabilities Long term debt, net of current maturities Other long term liabilities H Total liabilities 0 Commitments and contingencies (see Note 7) $ 210,432 147,681 28,951 34,563 421,627 255,250 67,906 744.783 $ 100,000 165,456 133,729 4,972 22,473 426.630 47.951 49,806 524,387 59 57 Stockholders' equity Class A Common Stock, $0.0003 1/3 par value; 400,000,000 shares authorized as of December 31, 2014 and 2013; 177,295,988 shares issued and outstanding as of December 31, 2014 and 171,628,708 shares issued and outstanding as of December 31, 2013. Class B Convertible Common Stock, $0.0003 1/3 par value; 36,600,000 shares authorized, issued and outstanding as of December 31, 2014 and 40,000,000 shares authorized, issued and outstanding as of December 31, 2013. Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) M Total stockholders' equity Total liabilities and stockholders' equity 12 13 508,350 397,248 856,687 653,842 (14,808) 1,350,300 $2,095,083 $1,577,741 2,194 1,053,354 Source: Under Armour (2014). Access the full report, cited in References, for Notes and other background information year.) UN ding 2014 annual is the ownization's ner carmine (Exhibir 2.3, 0. Under Armour income statement and the More the period of time). Net is important to note the differences between these two methods and the rest An organization's hooks may be kept on a cash basis or an accrual va $3,084,370 $2,332,051 $1.834921 Year Ended December 31, 2013 1,195,381 1,136,670 871,572 353,955 265,098 (5,335) (2,933) (6,410) (1,172) (73 342,210 260,993 134,168 98,663 hormoome lates $ 208,042 $ 162,330 $ 128,778 Under Armour, Inc. and Subsidiaries Consolidated Statements of Income (In thousands, except per share amounts) 2014 be includ 2. Some lize cash partners basis acc ing, as it made du nized on been rec accrual transact is ackno the stat this cha Exp ments t 2009; they mi ciation age or approas the inco larly in goal of stateme expend 2012 955,624 1,572,164 1,512,206 1,158,251 wald 879.297 670.6012 208,695 (5.183 @sonal and administrative expenses from operations chefore income taxes 203.439 74.661 come available per common share $ $ 0.62 0.98 $ 0.95 $ These they ar the fut in diffi in the of the 0.77 $ 0.75 $ 0.61 We were common shares outstanding 213,227 219,380 210,696 215,958 208.686 212,760 The For an it spen sustain concept CHECK 2. What are the three major sections of the balance sheet? For each of the 1. What is a T-account and how is it utilized in double-entry bookkeeping 3. What is the primary difference between an income statement and a stat tions, provide at least one example of the items that would be found the 5. If an organization's current ratio value is below 1.00, what might that 8. This chapter repeatedly states that financial ratios are most valuable when we values. Why is this context valuable when examining financial ratio values in comparison to the organization's historical ratio values and competit Exhibits 2.6 and 2.7 provide an income statement and balance sheet from Nik 2014 annual report. For the purposes of this problem and the case analysis the follows, use the data provided (May 31, 2014) to compute the ten financial ratis discussed in this chapter for Nike. For the financial ratios that employ stock dan 54 PARTI France Basics widely used among investors of cash flows? 4. What is the purpose of computing financial ratios? about the organization? 6. What information do leverage ratios provide? 7. Why is the price-to-earnings ratio PRACTICE problem use Nike's Class B common stock and a price per share of $76.91. EXHIBIT 2.6 Nike income statement. NIKE, Inc. Consolidated Statements of Income 2014 Year Ended May 31, 2013 2012 Income from continuing operations Revenu $ Gross pro Demand on expense Corting overad perse 23,331 13.183 10,148 2,607 4,472 7.079 interes pense income.net Notes 6. 7, and B) come before income taxes 27,799 $ 15,353 12.446 3,031 5,735 8,766 33 103 3,644 851 2,693 - 2,693 $ 25,313 S 14.279 11,034 2,745 5,051 7.798 (3) (15) 3.256 BOS 2,451 21 2,472 $ NET INCOME FROM CONTINUING OPERATIONS NET INCOME LOS FROM DISCONTINUED OPERATIONS NET INCOME Las por her from continung operations Basic cargo por common sharotes 1 and 12 Duted as per common the stand 12) Earrings por share from discontinued operations 54 3,011 754 2,257 (46 2,211 3.05$ Did carings por common share to land 12 2.97 $ 2.74 2.68 $ 2.45 2.40 $ 0.02 $ 0.02 $ 0.81 0.93 10.05 (0.05) 0.70 Source: Nike (2014) eping Analyzing Financial Statements and Ratios CHAPTER 2 55 nd there, Nike balance sheet. EXHIBIT 2.7 NIKE, Inc. Consolidated Balance Sheets May 31, 2014 2013 $ 2.220 $ 2.922 3,434 ve etitors 355 18 13,896 2.628 3,117 3,484 306 756 13.630 2,452 280 131 1,043 17,645 282 131 1.651 18,594 5 ASSETS Currents Cash and equivos Short-term investments Note 6) Accounts receivable.net Noto 11 Inventorios Notas 1 and 2) Deferred income taste 9 Prepaid expense and other current sets Notes and 17 Total current assets Property, plant and equipment.net Note 3) Identifiable intangible assets.net Note 4) Goodwill Note 4 Dafincome and other assets No.9 and 1 TOTAL ASSETS LIABILITIES AND SHAREHOLDERS' EQUITY Current Rabities: Current portion of long-term dobt Note) Notos payable Note 77 Accounts payable (Nota) Accrued abilities Notes 5. 6. and 17 Income taxes payable Note 9 Liabilities of discontinued corations Note 15 Total current liabilities Longform doo Note 8 Deferred income taxes and other late Notes 6, 9, 13 and 17) Commitments and contingences (Note 16 Redeemable preferred stock (Note 10) Shareholders' equity: Common stock at stated value Note 11). Class A convertible - 178 and 178 shares outstanding Class B - 692 and 716 shares outstanding Capital in excess of stated value Accumulated other comprehensive income Note 14 Retained earnings Total shareholders TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $7S 167 1.330 2.491 Nike's tha 57 ge 1,889 2,036 84 18 3.902 1.210 1,292 ats 5.027 1,199 1.544 3 5,865 85 4,871 10.824 18,594 5.184 274 5.620 11,081 17,545 Note: Nike indicates the "Notes to Consolidated Statements," found at the URL in the reference citation, are an integral part of the statement. Source: Nike (2014) Financial Analysis Comparison of Nike and UA CASE ANALYSIS According to the National Sporting Goods Association (2013), sporting goods in the United States is a nearly $60 billion industry. Sports apparel and athletic footwear are two of the largest catego- ries of this industry. Under Armour is a fast-growing competitor in the sports apparel and athletic footwear categories, in which Nike has long been recognized as the leader. Use the financial ratios for Nike that you computed in the Practice Problem and the financial ratios for Under Armour provided throughout this chapter to compare the financial health of Nike and Under Armour. Answer the following questions. case questions 1. In what ratio areas is Nike stronger than Under Armour? 2. In what ratio areas is Under Armour stronger than Nike? 3. If you were an investor considering purchasing stock in either Nike or Under Armour, which company would you choose? Explain and support your answer. 4. If you were a bank manager or other investor considering a request to loan money to either Nike or Under Armour, to which company would you choose to provide a loan? Explain and support your