ACC 101 - DURTSCHI
Brandon Ning
10/30/2012

Summary of Findings
Financial Ratio Chart
Ratio Explanations
Summary of Management Discussion and Analysis
Common-Sized Balance Sheet
Common-Sized Income Statement
Summary of Common-Sized Financial Statements
Financial Statements for Under Armour
Income Statement
Statement of Changes in Owner’s Equity
Balance Sheet
Statement of Cash Flows
Auditor’s Report
First Page of Management Discussion and Analysis
Financial Statements for Nike
Balance Sheet
Income Statement
Statement of Changes in Owner’s Equity
Statement of Cash Flows
Auditor’s Report
First Page of Management Discussion and Analysis
- Page 2
- Page 3
- Page 4
- Page 5
- Page 6
- Page 7 – 8
- Page 9
- Page 11
- Page 12
- Page 13
- Page 14
- Page 15
- Page 16
- Page 18
- Page 19 – 20
- Page 21
- Page 22
- Page 23
- Page 24
1

2
Summary of Findings
It is evident that the overall financial stature of Nike is far superior to that of Under
Armour, prompting me to believe in Nike to be the better investment choice. The common-sized income statement reveals Nike’s heightened ability to generate enormous amounts of revenue
($20,862 million) and ultimately in net income ($2,133 million) compared to that of its inferior competitor, Under Armour (Revenue being $1,472,684 thousand and net income being $96,919 thousand). The difference in net income is a stunning $2,036,081,000. Though the expenses, costs, and liabilities are bigger for Nike, it seems only natural for this to occur if its final net income is higher in comparison to Under Armour’s.
The amount of common stock invested into each Corporation is also very telling of which seems to be the better choice, in this case, Nike winning once again in numbers. With further analysis of the financial ratios for the respective corporations, Nike has the upper-hand in Return on Equity, Profit Margin, and Return on Assets, possibly due to better managing. Nike loses to
Under Armour in ratios dealing with debt, but as I have stated earlier, I believe this only to be natural as Nike makes more money. It is probably important to note, though, that Under Armour does indeed have a better Current Ratio, giving it an advantage in acquiring cash to pay off debt over Nike.

Financial Ratios
Debt/Asset
Debt/Equity
Ratio Under Armour Nike
0.307631553 0.343712495
0.444317696 0.523722442
Return on Equity 0.171023771 0.217686381
Profit Margin
Return on Assets
0.065811131
0.121559926
Working Capital (Under Armour in Thousands/ Nike in Millions) 506056
0.102243313
0.145018187
7339
3
Current Ratio
*Under Armour Values in red for ease of reading
3.756191213 2.854219303

4
Ratio Explanations
Debt/Asset - For every dollar of assets owned by Under Armour, they have $0.31 of debt, while
Nike has $0.34 for each dollar of assets. Under Armour seems to have the advantage here.
Debt/Equity - For every dollar of equity for Under Armour they have $0.44 of debt, whereas
Nike has $0.52 of debt for each dollar of equity. Under Armour once again seems to have an upper-hand here.
Return on Equity - For every dollar invested in equity Under Armour makes a profit of $0.17
(17%) while Nike makes $0.22 (22%) of profit. Though Nike ends up with higher debt, they make money than Under Armour from equity.
Profit Margin - For every dollar of sales for Under Armour it made $0.06 of profit while Nike made $0.10 of profit. Possible reasons of this difference may be due to Under Armour holding profits down or Nike has lower expenses. Nike seems to make an overall higher profit than
Under Armour.
Return on Assets - For every dollar owned in assets by Under Armour it makes $0.12 while Nike makes $0.15. Nike seems to make better use of their assets than Under Armour does.
Working Capital - Both companies have enough cash on hand to cover debt due in the next years.
Nike will naturally have to acquire a great amount of working capital to pay its larger debts in comparison to Under Armour.
Current Ratio - For every dollar of debt due next year Under Armour has $3.76 assets easily convertible to cash to pay that debt, while Nike has $2.85. Under Armour appears to have more readily-convertible assets on hand than Nike does.

5
Summary of Management Discussion and Analysis
Under Armour
Management recognizes its growing revenues and claims its effects are due to an increase in interest for their products, which is a direct result of progressive consumer demand for a healthier lifestyle. They further this idea by mention of their clothing line which is known primarily for its ability to “provide better performance by wicking perspiration away from the skin, helping to regulate body temperature and enhancing comfort.”
It is also noted that Under Armour receives a large amount of their income from operations in the last two quarters of the year, especially during the fall season, when demand of their COLDGEAR line is high. The end of the discussion highlights and recognizes a recently issued accounting standard which they believe “will not have a material impact on our consolidated financial statements.”
Nike
Nike proclaims its strategy as to “achieve long-term revenue growth by creating innovative, ‘must have’ products, building deep personal consumer connections with our brands, and delivering compelling retail presentation and experiences.” Revenues for fiscal 2011 have increased 10% as compared to fiscal 2010. More specifically, its footwear and apparel revenue increased 11% and 9%.
Several financial reports for several countries where they span influence are also presented, North America generating the highest values, Europe coming in second, and China in third. A separate section highlighting its concerns with foreign currency and exchange is provided. Like Under Armour, recently adopted and issued accounting standards are mentioned

6
Common-Sized Income Statement
Revenue
Total Revenue
Account
Costs and Expense
Cost of Sales
Gross Profit
Op, Sales, Gen Admin Exp
Income from Operations before Interest and Taxes
Net Interest Expense
Other Expense
Earnings before Taxes
Under Armour
(in thousands)
$1,472,684
$1,472,684
$759,848
$712,836
$550,069
%Sales
1
1
0.515961
0.484039
0.373515
Nike
(in millions)
$20,862
$20,862
$11,354
$9,508
$6,693
$162,767
$3,841
$2,064
$156,862
0.110524
0.002608
0.001402
0.106514
$2,815
$4
($33)
$2,844
Taxes
Net Income
$59,943 0.040703
$96,919 0.065811
*Under Armour Values in Red for Ease of Reading
%Sales
0.544243
0.455757
0.000192
-0.00158
0.136324
1
1
0.320823
0.134934
$711 0.034081
$2,133 0.102243

7
Account
Assets
Cash and Equiv
Receivables
Inventory
Other
Total Current Assets
LT Assets
Land
PPE(net)
Other Assets
Intangible Assets
Deferred Income Taxes
Other LT Assets
Goodwill
Total Other Assets
Total Assets
Liabilities
Payables
Accrued Expenses
Accrued Liabilities
Current Maturity of LT
Debt
Other Current Liabilities
Total Current Liabilities
Long Term Liabilities
Long Term Debt
Other LT Liabilities
Total Long Term Liabilities
Total Liabilities
Common-Sized Balance Sheet
Under Armour
(in thousands)
% Total
Assets
$175,384 0.190798621
$134,043 0.145824132
$324,409 0.35292153
$55,827 0.060733673
$689,663 0.750277956
Nike
(in millions)
$159,135
$159,135
$5,535
$70,412.00
0.173121485
0.173121485
0.006021475
$15,885 0.017281144
$48,992.00 0.053297941
0.076600559
% Total
Assets
$1,955 0.130350713
$3,138 0.209227897
$2,715 0.181024137
$3,489 0.232631017
$11,297 0.753233765
$2,115 0.141018803
$2,115 0.141018803
$487 0.032470996
$894 0.059607948
$0 0
$205 0.013668489
$1,586 0.105747433
$919,210.00 1
$100,527 0.109362387
$69,285 0.075374506
0 0
$6,882 0.007486864
$6,913 0.007520588
$183,607 0.199744346
70,842 0.077068352
$28,329 0.030818855
$99,171 0.107887207
$282,778 0.307631553
$14,998 1
$1,773 0.118215762
0 0
$1,985 0.13235098
$200 0.013335111
0 0
$3,958 0.263901854
$276 0.018402454
$921 0.061408188
$1,197 0.079810641
$5,155 0.343712495

8
Stockholder's Equity
Common Stock
Additional Paid-In Capital
Retained Earnings
Other Income
Total Stockholder's Equity
17 0.0000184
$268,223 0.291797304
$366,164 0.398346406
$2,028 0.002206242
$636,432 0.692368447
1 Total Liabilities and SE $919,210
*Under Armour Values in Red for Ease of Reading
3
3,944
0.0002
0.26
$5,801 0.386784905
$95 0.006334178
$9,843 0.656287505
$14,998 1

9
Summary of Common-Sized Financial Statements
As noted earlier in the Summary of Findings earlier in this analysis, Nike is ultimately the more-profitable business. Nike generates more revenue, gross profit, earnings before taxes, and net income as the common-sized income statement reveals. Every form of expense is, without doubt, higher in Nike’s entries in comparison to Under Armour’s but this feature can be overlooked (though ,of course, not completely and blindly) due to Nike’s overall level of profitability.
Upon looking at the common-sized balance sheet, several notable differences can be seen. Under Armour holds a good portion of its assets in cash and equivalents, which is a rather good trait in the face of liquidity. Nike clearly owns more land in cash amounts. It may be interesting to note that both businesses have a large portion of its assets in inventory, which should be a prominent feature of manufacturers of clothing and sportswear, among other products. Nike has the overall higher amount of total assets.
Nike has a significant portion of its current liabilities as a percentage of its assets, making Under Armour in a possibly better position in case of sudden liquidation. Under Armour also has the lower percentage in assets of its total liabilities, again making Under Armour in a better position to pay off debt or liabilities.

10

Income Statement
11

Statement of Changes in Owner’s Equity
12

Balance Sheet
13

Statement of Cash Flows
14

Auditor’s Report
15

First Page of Management Discussion and Analysis
16

17

Income Statement
18

Statement of Changes in Owner’s Equity
19

Statement of Changes in Owner’s Equity (Continued)
20

Balance Sheet
21

Statement of Cash Flows
22

Auditor’s Report
23

First Page of Management and Discussion and Analysis
24