Comparing Two Companies in the Same Industry: Columbia Sportswear & Under Armour

Question

Comparing Two Companies in the Same Industry: Columbia Sportswear & Under Armour

For the information needed to answer the following questions. Refer to the financial information in the following links:

Columbia Sportswear: http://cvg.cengagenow.com/ilrn/books/pnal09h/images/ch02/appc.pdf

Under Armour http://cvg.cengagenow.com/ilrn/books/pnal09h/images/ch02/appb.pdf

Required:

1. Compute each company's working capital at the end of the two most recent years. Also, for each company, compute the change in working capital during the most recent year. NOTE: Enter amounts in thousands.

Columbia Sportswear:

12/31/11 Working capital:

$

12/31/10 Working capital:

$

Change in working capital:

$

Under Armour:

12/31/11 Working capital:

$

12/31/10 Working capital:

$

Change in working capital

$

2. Compute each company's current ratio at the end of the two most recent years. Compute the percentage change in the ratio during the most recent year. Round your answers for the current ratio to two decimal places. Convert the percentage change from a decimal to a percentage & then round to one decimal place. For example, .0051478 would be converted to .51478% & rounded to .5%.

Columbia Sportswear:

12/31/11 Current ratio:

:1

12/31/10 Current ratio:

:1

Percentage change in ratio

%

Under Armour:

12/31/11 Current ratio:

:1

12/31/10 Current ratio:

:1

Percentage change in ratio

%

3. What are the largest current assets both companies report on the balance sheet at the end of the most recent year?

A. Cash

B. Equipment & cash

C. Investments & inventories

D. Prepaids & receivables

E. Receivables & inventories

Columbia Sportswear:

12/31/11 Working capital:

$

12/31/10 Working capital:

$

Change in working capital:

$

Explanation / Answer

Answer:1 Working capital=Current Asset-Current liability

Columbia Sportswear:

12/31/11 Working capital= $1049526-$267002=782524

12/31/10 Working capital= $990880-$251626=$739254

Change in Working capital=782524-739254=$43270

Under Armour:

12/31/11 Working capital= $689663-$183607=$506056

12/31/10 Working capital= $555850-$149147=$406703

Change in Working capital=$506056-$406703=$99353

Answer:2 Current ratio=CA/CL

Columbia Sportswear:

12/31/11 Current ratio= $1049526/$267002=3.93:1

12/31/10 Current ratio= $990880/$251626=3.94:1

% Change in ratio=-0.25%

Under Armour:

12/31/11 Current ratio= $689663/$183607=3.76:1

12/31/10 Current ratio= $555850/$149147=3.72:1

% Change in ratio=-1%

Answer:3 E. Receivables & inventories

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