Question

For Under Armour

The last page of your paper should be the citing of sources used.

Usually, the best place to start your paper is with the latest 10-K Report of your selected company.

Write a 7-8-page, APA format, double-spaced paper answering the questions below supported by calculations, operating, and financial information.

Requirements

What is the name of the company? What is its industry sector?

What are the operating risks of the company?

What is the financial risk of the company (the debt to total capitalization ratio)?

Does the company have any preferred stock?

What is the capital structure of the company: short-term portion of long-term debt, long-term debt, preferred stock (if any), and market value of common stock issued and outstanding?

What is the company's current actual beta (or equity beta)?

What is the company's current marginal tax rate?

What is the cost of debt before and after taxes?

What is the cost of preferred stock (if any)?

What is the cost of common stock equity? (Use the Capital Asset Pricing Model.)

What is the weighted average cost of capital of the company?

How has the company's stock been performing in the last 5 years?

What is the annual cash dividend yield of the common stock?

How would you assess the overall risk structure of the company in terms
of its operating risks and financial risk (debt-to-capitalization ratio)?

Would you invest in this company? Why or why not?

The last page of your paper should be a citing of the sources that
you used to prepare this paper.

http://www.uabiz.com/sec.cfm    10k 2018

	Under Armour, Inc. and Subsidiaries
	Consolidated Balance Sheets
	(In thousands, except share data)
		December 31, 2017	December 31, 2016
	Assets
	Current assets
	Cash and cash equivalents	$                    312,483	$                    250,470
	Accounts receivable, net	609,670	622,685
	Inventories	1,158,548	917,491
	Prepaid expenses and other current assets	256,978	174,507
	Total current assets	2,337,679	1,965,153
	Property and equipment, net	885,774	804,211
	Goodwill	555,674	563,591
	Intangible assets, net	46,995	64,310
	Deferred income taxes	82,801	136,862
	Other long term assets	97,444	110,204
	Total assets	$                 4,006,367	$                 3,644,331
	Liabilities and Stockholders' Equity
	Current liabilities
	Revolving credit facility, current	$                    125,000	$                            -
	Accounts payable	561,108	409,679
	Accrued expenses	296,841	208,750
	Current maturities of long term debt	27,000	27,000
	Other current liabilities	50,426	40,387
	Total current liabilities	1,060,375	685,816
	Long term debt, net of current maturities	765,046	790,388
	Other long term liabilities	162,304	137,227
	Total liabilities	1,987,725	1,613,431
	Commitments and contingencies (see Note 6)
	Stockholders' equity
	Class A Common Stock, $0.0003 1/3 par value; 400,000,000
	shares authorized as of December 31, 2017, and 2016;
	185,257,423 shares issued and outstanding as of December
	31, 2017, and 183,814,911 shares issued and outstanding as
	of December 31, 2016.	61	61
	Class B Convertible Common Stock, $0.0003 1/3 par value;
	34,450,000 shares authorized, issued and outstanding as of
	December 31, 2017, and December 31, 2016.	11	11
	Class C Common Stock, $0.0003 1/3 par value; 400,000,000
	shares authorized as of December 31, 2017, and 2016;
	222,375,079 shares issued and outstanding as of December
	31, 2017, and 220,174,048 shares issued and outstanding as
	of December 31, 2016.	74	73
	Additional paid-in capital	872,266	823,484
	Retained earnings	1,184,441	1,259,414
	Accumulated other comprehensive loss	(38,211)	(52,143)
	Total stockholders' equity	2,018,642	2,030,900
	Total liabilities and stockholders' equity	$                 4,006,367	$                 3,644,331

Answer 1

1- Under Armour Inc. Sector: Apparel Manufacturing

Under Armour, Inc., incorporated on July 01, 1996, is engaged in the development, marketing and distribution of branded performance apparel, footwear and accessories for men, women and youth. The Company sells its branded apparel, footwear and accessories in North America through its wholesale and direct to consumer channels.

2- What are the operating risks of the company?

Operating Leverage = %change in EBIT / %change in sales

                                 = ((27,843 – 417,471)/417,471) / ((4,976,553 – 4825335)/ 4825335)

  

= -0.933 / 0.0314          = - 29. 7816

Company negative operating leverage as operating expense as a % of revenues increased to 44.44% it means. Negative operating leverage has a negative effect on the revenue of the firm resulting in a greater percentage decrease in net operating income.

3- What is the financial risk of the company (the debt to total capitalization ratio)?

Total Capitalization = Assets – Liabilities = 4,006,367 - 1,987,725 = 2,018,642

Debt / Total Capitalization = 1,987,725 / 2,018,642 = 0.984

4- Does the company have any preferred stock?

No.

5- What is the capital structure of the company: short-term portion of long-term debt, long-term debt, preferred stock (if any), and market value of common stock issued and outstanding?

short-term portion of long-term debt: Current maturities of long term debt = 50, 426,

Long term Debt: 765,046

Preferred Stock: 0

Market value of common stock issued and outstanding 2,018,642

6- What is the company's current actual beta (or equity beta)?

Current Beta = -0.101 (Data: 8/3/16- 8/3/18)

=Covariance (Market return , Stock return) / Variance (Market Return)