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Week2PP.pptxUnder Armour
Nicole Williamson
University of Phoenix
06/17/2020
Introduction
Under Armour manufactures accessories, sports wear, footwear, and casual apparel.
The company has its headquarters in Baltimore, Maryland.
The company doesn’t only sell locally but also globally. It is present in the US, Chin, Netherlands among many other countries.
Kevin Plank founded the company in the years 1996
The company has over 15000 employees.
The company is doing well financially
Cash Balance
Cash balance is the total amount of money the company has. The cash balance can be positive or negative. If its positive, it means that the company has its money in its accounts. If its negative, it means that the company accounts have been overdrawn
The financial information that could be found was for before 2015.
2015 cash balance = -463,323
2014 cash balance = 245,686
Account Receivable
Account receivable shows the amount of money that customers owe the company. There are times when a company gives products to its customers on credit the customer is given a certain amount of time to pay the amount in full.
Account receivable 2014: $279835
Account receivable 2015: $433638
Cash and Cash Equivalent
When computing the cash and cash equivalents, the company considers all the liquid investments of the company that have a maturity of three months or less from the date of inception.
The interest expenses is related to cash and cash equivalents. The interest income garnered by the company was $164.0 thousand in 2015, $192.0 thousand in 2014, and $23.7 thousand in 2013.
Accounts Receivable and Key Accounting Policies
Accounts receivable subject the company to a high concentration of credit risk.
The companies that make up most of the company’s account receivables are large sporting retail companies. For example, in December 31 2015, the company’s largest customer in North America made up for 18.7% of the company’s accounts receivable.
The company first looks into the financial health of the company before giving it products on credit.
The company doesn’t ask for collateral.
Allowance of Doubtful Accounts
Not all customers pay back the company for the goods they took on credit which is why the company often sets apart a certain amount of money which helps offset the losses incurred when customers fail to pay the company for goods taken on credit.
The company often looks at the historical level of losses and the state of the retail industry when determining the money in the reserve.
Sometimes the company ends up with a lot of money in the reserve and sometimes the amount is less. This is brought by the fact that the company cannot predict the financial conditions of its clients.
Inventory Balance
Inventory balance 2015 :$783,031
Inventory balance 2014: $536,714
Policies for Reporting Inventory
The company’s inventory consists of finished goods.
The costs of inventories include all the costs incurred by the company to get the inventory to its current condition.
The company uses the first-in, first-out method of determination when determining the value of the inventory.
The company determines the market value of its inventory by studying the assumptions made about future demand and the state of the retail market.
If the estimated market value turns out to be less than the carrying value, the company records a charge to the cost of goods sold to reflect the low market6 value.
AR turnover and Days Outstanding for Receivable
AR Turnover
Net Credit Sales = 1,170,686
Account receivable
Beginning of year = 279835
End of the year = 433638
= (279835 + 433638)/2 = 356736.5
= 1,170,686/356736.5 = 3.28
AR Turnover =3.28
Days of Outstanding for Receivables
= 365/3.28 = 111.28
Days of Outstanding for Receivable = 111 days
Inventory Turnover and Days Sales in Inventory.
Inventory Turnover
Sales = 2057766
Inventory
Beginning of Year= 536714
End of Year = 783031
= (536714+783031)/2 = 659827.5
= 2057766/659827.5 = 3.12
Inventory Turnover = 3.12
Days Sales in Inventory
3.12*365 = 1138.8
Days of Inventory Turnover = 1139days
