Question

Comparative Analysis Problem: Columbia Sportswear Company vs. Under Armour, Inc. The financial statements for the Columbia Sportswear Company can be found in Appendix A, and Under Armour, Inc's financial can be found in Appendix B at the end of this book.

Columbia Statements are here:

http://www.chegg.com/homework-help/questions-and-answers/financial-statements-columbia-sportswear-company-presented-appendix-b-based-information-fi-q20398389

Columbia annual reports are here: http://investor.columbia.com/annuals.cfm

Under Armour Statements are here: Keep scrolling you will see the info needed. https://www.sec.gov/Archives/edgar/data/1336917/000133691715000006/ua-20141231x10k.htm

Under Armour annual reports are here: http://www.annualreports.com/Company/under-armour-inc

Required

a) Compare the dollar value of inventory carried on the balance sheet by each company in 2014 and 2013. Which company carries the greatest dollar amount of inventory? Compare the ratio of inventory divided by total assets for each company for 2014 and 2013. Which company carries the largest relative investment in inventory?

b) Calculate the inventory turnover and days’ sales in inventory for 2014 and 2013 for each company. Inventory at December 31, 2012, for Columbia and Under Armour, Inc. was $363.3 million and $319.3 million, respectively.

c) Which company appears to be doing the better job of managing its investment in inventory?

Answer 1

1. Dollar value of inventory
	Amount in Thousands ($)
	Columbia Sportswear Company		Under Armour, Inc.
	2014	2013	2014	2013
Inventory	384,650	329,228	536,714	469,006
Under Armour, Inc. carries the greatest dollar amount of Inventory in 2014
Total Assets	1,792,209	1,605,588	2,095,083	1,577,741
Inventory to Asset Ratio	21.46%	20.51%	25.62%	29.73%
Under Armour, Inc. carries the largest relative investment in inventory in
2013
Cost of Goods sold	1,145,639	941,341	1,572,164	1,195,381
Average Inventory	356,939	346,264	502,860	394,153
Inventory turnover ratio	3.21	2.72	3.13	3.03
Days' sales in Inventory	114	134	117	120
Columbia Sportswear Company is doing good job in managing its investment
in inventory. The investment in inventory is around 20% which is relatively
not a very high portion of total assets. The inventory turnover ratio is high,
Which is a positive sign. High turnover ratio implies strong sales.
Days sales in inventory means number of days a company holds its inventory
before selling it. Days sales in inventory are less for Columbia Sportswear
Company for 2014 means its doing better job in managing its inventory.
Note:
Inventory to asset ratio = Inventory / Total Assets
Inventory Turnover Ratio = Cost of Goods Sold/ Average Inventory
Average Inventory = Beginning Inventory + Ending Inventory
2
Days sales in Inventory = 365 / Inventory Turnover Ratio