In: Accounting
Dec. 31, 2015 | Dec. 31, 2014 | |
Assets | ||
Cash and cash equivalents | 129,852 | 593,175 |
Accounts receivable, net | 433,638 | 279,835 |
Inventories | 783,031 | 536,714 |
Prepaid expenses and other current assets | 152,242 | 87,177 |
Deferred income taxes | 52,498 | |
Total current assets | 1,498,763 | 1,549,399 |
Property and equipment, net | 538,531 | 305,564 |
Goodwill | 585,181 | 123,256 |
Intangible assets, net | 75,686 | 26,230 |
Deferred income taxes | 92,157 | 33,570 |
Other long-term assets | 78,582 | 57,064 |
Total assets | 2,868,900 | 2,095,083 |
Liabilities and Stockholders Equity | ||
Accounts payable | 200,460 | 210,432 |
Accrued expenses | 192,935 | 147,681 |
Current maturities of long term-debt | 42,000 | 28,951 |
Other current liabilities | 43,415 | 34,563 |
Total current liabilities | 478,810 | 421,627 |
Long-term debt, net of current maturities | 352,000 | 255,250 |
Long-term line of credit, noncurrent | 275,000 | 0 |
Other long-term liabilities | 94,868 | 67,906 |
Total liabilities | 1,200,678 | 744,783 |
Stockholders' equity | ||
Additional paid-in capital | 636,630 | 508,350 |
Retained earnings | 1,076,533 | 856,687 |
Accumulated other comprehensive loss | -45,013 | -14,808 |
Total stockholders' equity | 1,668,150 | 1,350,229 |
Total liabilities and stockholders' equity | 2,868,828 | 2,095,012 |
Under Armour Inc. | ||
Consolidated Statement of Income | ||
Dec. 31, 2015 | ||
Net Revenues | 3,963,313 | |
Cost of goods sold | 2,057,766 | |
Gross profit | 1,905,547 | |
Selling, general and administrative expenses | 1,497,000 | |
Income from operations | 408,547 | |
Interest expense, net | -14,628 | |
Other expense, net | -7,234 | |
Income before income taxes | 386,685 | |
Provision for income taxes | 154,112 | |
Net income | 232,573 |
A) Compute its financial leverage (FLEV), Spread, and noncontrolling interest (NCI) ratio for 2015. Recall that NNE = NOPAT - Net income
B) Assume that its return on equity (ROA) for 2015 is 38.95% and its return on net operating assets (RNOA) is 26.58%. Confirm computations to yield the relation: ROE = [RNOA + (FLEV x Spread)] x NCI ratio
C) What do your computations of the nonoperating return imply about the company's use of borrowed funds?
Financial Leverage (FLEV) = Earnings before Interest and Tax (EBIT ) / Earning s before Tax(EBT) – ( Preference Dividend(PD) / 1 – Tax rate)
= (408547 – 7234 ) / 386685 – 0
= 1.038
Spread is the difference between the ask rate and bid rate of the security.
b) Return on Equity ( ROE) = Net Income / Shareholders EQUITY *100
Non operating return is the return from the portion of the organization’s income that is derived from activities not related to its core business operations.