THERE ARE TWO PARTS TO QUESTION: 1 - COMMON SIZE FINANCIALS (BE SURE TO INDICATE
ID: 2438553 • Letter: T
Question
THERE ARE TWO PARTS TO QUESTION: 1 - COMMON SIZE FINANCIALS (BE SURE TO INDICATE POTENTIAL RED FLAGS IN STATEMENTS) AND 2- DUPONT MODEL
PLEASE SHOW EQUATIONS FOR ALL ANSWERS
1) Common-size analysis- Given the information presented a) Complete these tables using common-size analysis; b) Summarize the highlights from common-size analysis for Under Armour and indicate possible red flags or problems that may exist within the financial statements.
Income statement - Common Size
UNDER ARMOUR
Amounts (in 000s)
Percentages
For year ended
12/31/2015
12/31/2015
Net revenues
$3,963,313
100%
Cost of goods sold
(2,057,766)
?%
Gross profit
1,905,547
?%
Selling, general and administrative expenses
(1,497,000)
?%
Income from operations
408,547
?%
Interest expense, net
(14,628)
?%
Other expense, net
(7,234)
?%
Income before income taxes
386,685
?%
Provision for income taxes
(154,112)
?%
Net income
$232,573
?%
Balance sheets - Common Size
UNDER ARMOUR
Amounts (in 000s)
Percentages
For year ended
12/31/2015
12/31/2014
12/31/2015
12/31/2014
Assets
Cash and cash equivalents
$ 129,852
$ 593,175
?%
?%
Accounts receivable, net
433,638
279,835
?%
?%
Inventories
783,031
536,714
?%
?%
Prepaid expenses and other current assets
152,242
87,177
?%
?%
Deferred income taxes
-
52,498
?%
?%
Total Current Assets
1,498,763
1,549,399
?%
?%
Property and equipment, net
538,531
305,564
?%
?%
Goodwill
585,181
123,256
?%
?%
Intangible assets, net
75,686
26,230
?%
?%
Deferred income taxes
92,157
33,570
?%
?%
Other long-term assets
78,582
57,064
?%
?%
Total Assets
$ 2,868,900
$ 2,095,083
100%
100%
Liabilities and Stockholders' Equity
Accounts payable
$ 200,460
$ 210,432
?%
?%
Accrued expenses
192,935
147,681
?%
?%
Current maturities of long term - debt
42,000
28,951
?%
?%
Other current liabilities
43,415
34,563
?%
?%
Total Current Liabilities
478,810
421,627
?%
?%
Long-term debt, net of current maturities
352,000
255,250
?%
?%
Long-term line of credit, noncurrent
275,000
-
?%
?%
Other long-term liabilities
94,868
67,906
?%
?%
Total Liabilities
1,200,678
744,783
?%
?%
Stockholders' Equity
Additional paid-in capital
636,630
508,350
?%
?%
Retained earnings
1,076,533
856,687
?%
?%
Accumulated other comprehensive loss
(44,941)
(14,737)
?%
?%
Total Stockholders' Equity
1,668,222
1,350,300
?%
?%
Total Liabilities and Stockholders' Equity
$ 2,868,900
$ 2,095,083
100%
100%
(2) Given the information presented above, calculate the DuPont Model for Under Armour for the year ended at Dec. 31, 2015. Must show equations and detailed calculations underneath the table.
Under Armour INC.
Profit Margin (PM)
?
Asset Turnover (AT)
?
Return on Assets (ROA)
?
Financial Leverage (FL)
?
Return on Equity (ROE)
?
1) Common-size analysis- Given the information presented a) Complete these tables using common-size analysis; b) Summarize the highlights from common-size analysis for Under Armour and indicate possible red flags or problems that may exist within the financial statements.
Income statement - Common Size
UNDER ARMOUR
Amounts (in 000s)
Percentages
For year ended
12/31/2015
12/31/2015
Net revenues
$3,963,313
100%
Cost of goods sold
(2,057,766)
?%
Gross profit
1,905,547
?%
Selling, general and administrative expenses
(1,497,000)
?%
Income from operations
408,547
?%
Interest expense, net
(14,628)
?%
Other expense, net
(7,234)
?%
Income before income taxes
386,685
?%
Provision for income taxes
(154,112)
?%
Net income
$232,573
?%
Explanation / Answer
Income statement
Under armour
Amounts (S'000)
Percentages
31-Dec-15
31-Dec-15
Net revenues
3,963,313.00
100%
Cost of goods sold
(2,057,766.00)
(51.92)
Gross profit
1,905,547.00
48.08
Selling, general and administrative expenses
(1,497,000.00)
(37.77)
Income from operations
408,457.00
10.31
Interest expense, net
(14,628.00)
(0.37)
other expense, net
(7,234.00)
(0.18)
income before income taxes
386,685.00
9.76
Provision for income tax
(154,112.00)
(3.89)
Net income
232,573.00
5.87
Balance sheet
Under armour
Amounts (S'000)
Percentages
31-Dec-15
31-Dec-14
########
########
Assets
Cash and cash equivalents
129,852.00
593,175.00
4.53
28.31
Accounts receivable, net
433,638.00
279,835.00
15.12
13.36
inventories
783,031.00
536,714.00
27.29
25.62
prepaid expenses and other current assets
152,242.00
87,177.00
5.31
4.16
Deferred income taxes
52,498.00
total current assets
1,498,763.00
1,549,399.00
52.24
73.95
property and equipment, net
538,531.00
305,564.00
18.77
14.58
Goodwill
585,181.00
123,256.00
20.40
5.88
Intangible assets
75,686.00
26,230.00
2.64
1.25
Deferred income taxes
92,157.00
33,570.00
3.21
1.60
other long term assets
78,582.00
57,064.00
2.74
2.72
total assets
2,868,900.00
2,095,083.00
100.00
100.00
Liabilities and equity
Accounts payable
200,460.00
210,432.00
6.99
10.04
Accrued expenses
192,935.00
147,681.00
6.73
7.05
current maturities of long term debt
42,000.00
28,951.00
1.46
1.38
other current liabilities
43,415.00
34,563.00
1.51
1.65
total current liabilities
478,810.00
421,627.00
16.69
20.12
long term debt, net of current maturities
352,000.00
255,250.00
12.27
12.18
long term line of credit non-current
275,000.00
9.59
other long term liabilities
94,868.00
67,906.00
3.31
3.24
Total liabilities
1,200,678.00
744,783.00
41.85
35.55
Stock holders' equity
Additional paid in capital
636,630.00
508,350.00
22.19
24.26
Retained earnings
1,076,533.00
856,687.00
37.52
40.89
Accumulated other comprehensive loss
(44,941.00)
(14,737.00)
(1.57)
(0.70)
Total stockholders' equity
1,668,222.00
1,350,300.00
58.15
64.45
Total liabilities and stockholders' equity
2,868,900.00
2,095,083.00
100.00
100.00
DU Pont
Profit margin (Net income x 100/ Net revenue)
5.87
Asset turnover (Revenue / Average total assets)
Revenue
3,963,313.00
Average total assets (2868900+2095083)/2
2,481,991.50
Asset turnover (Revenue / Average total assets)
1.60
Return on assets (Net income x 100/ Total assets)
8.11
Financial leverage (EBIT / EBIT - interest)
EBIT
408,457.00
Interest
(14,628.00)
Financial leverage (EBIT / EBIT - interest)
1.04
Return on equity (Net income x 100/ Stockholders' equity)
Net income
232,573.00
Total stockholders' equity
1,668,222.00
Return on equity (Net income x 100/ Stockholders' equity)
13.94
Income statement
Under armour
Amounts (S'000)
Percentages
31-Dec-15
31-Dec-15
Net revenues
3,963,313.00
100%
Cost of goods sold
(2,057,766.00)
(51.92)
Gross profit
1,905,547.00
48.08
Selling, general and administrative expenses
(1,497,000.00)
(37.77)
Income from operations
408,457.00
10.31
Interest expense, net
(14,628.00)
(0.37)
other expense, net
(7,234.00)
(0.18)
income before income taxes
386,685.00
9.76
Provision for income tax
(154,112.00)
(3.89)
Net income
232,573.00
5.87
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