Introducon
I chose to analyze Under Armour, Inc. for my financial and trend analysis paper. I chose Under Armour for
a few different reasons. They are growing at a rapid rate, they are aempting to expand globally, and I
have used a number of Under Armour products in the past. Under Armour is in the very competitive
industry of sports apparel. Well established competitors such as Nike, Adidas, and Reebok make it
di’cult to enter the market. Under Armour primarily sells sports and workout apparel for both men and
women including t-shirts, shorts, sweatpants, shoes, and others.
Under Armour was created in 1995 by Kevin Plank. He got the idea for a t-shirt that would stay light in
the harshest conditions a/er seeing a football team’s shirts drenched with sweat a/er practice on a hot
day. He created it and sold it to his first college team in 1996. In 2003, the company ran its first
commercial using the slogan “Protect This House”. The company also began selling its women’s product
line in 2003. Today, Under Armour is aempting to expand globally to countries such as Brazil, Japan, and
Canada.
Trend Analysis
The first ratio I chose to calculate for Under Armour is current ratio. The current ratios were around 3.58,
3.76, and 3.73 for 2012, 2011, and 2010 respectively. Their current ratio has stayed relatively stable over
the past three years and there is no reason to believe this is going change in the near future. A stable
current ratio bodes well for Under Armour because it shows the company is not acquiring additional
liabilities at a rate which is outpacing its increases in assets. Current ratios above three are also
promising for the company, showing they are highly solvent and easily able to pay off their debts.
Second, I chose to calculate was debt ratio. The debt ratio calculations for 2012, 2011, and 2010 were
around 0.29, 0.31, 0.26 respectively. Debt ratio is closely related to current ratio as it compares total
liabilities and assets rather than current liabilities and assets. When long term assets and liabilities are
added in, Under Armour remains in a strong financial position. The company’s total liabilities add up to
about 30% of the company’s total assets in all three years. Much like current ratio, Under Armour’s
relatively stable debt ratio shows the company is highly solvent, and is acquiring assets at a rate quickly
enough to keep up with its acquisition of liabilities.
Next, I chose to calculate inventory turnover. The inventory turnover for 2012, 2011, and 2010 were
around 2.87, 2.24, and 2.33 respectively. The higher a company’s inventory turnover ratio the quicker
the company is selling its inventory to customers and creating revenue. The company has a relatively
strong inventory turnover rate and the recent increase between 2011 and 2012 is promising for the
company’s future. If the inventory turnover rate continues to rise, Under Armour can expect to see