Refer to Under Armour, Inc.'s, consolidated financial statements in Appendix B and online in the filings section of www.sec.gov. These financial statements report a number of liabilities.
Requirements
1. The current liability section of Under Armour, Inc.'s, Consolidated Balance Sheet as of December 31, 2014, lists five different liabilities. List them and give a brief description of each.
2. Under Armour, Inc.'s current liability, revolving credit facility, was reduced to zero as of December 31, 2014. Refer to Note 6-Credit Facility and Long Term Debt. Describe what revolving credit facility means and why it was reduced to zero in 2014.
3. For 2014, calculate accounts payable turnover, both as a ratio and in number of days. Describe what this ratio means. Also compute the following other ratios for 2014 (if you have already computed them as part of your work in previous chapters, refer to them): (1) current ratio, (2) quick ratio, (3) days' sales to collection for accounts receivable, and (4) inventory turnover (express in days by dividing 365 by the turnover). How do you think you would combine the information in these ratios to assess Under Armour, Inc.'s, current debt-paying ability? (Challenge)
4. Refer to Note 6-Credit Facility and Long Term Debt, under Other Long Term Debt. What is Under Armour's weighted average interest rate on outstanding borrowings for 2014? How much in long-term debt obligations does Under Armour currently owe for 2015?
5. Refer to the note entitled "Commitments and Contingencies." Describe the contents of this footnote. Are any of these items included in the liabilities recorded in either the current or long-term section of the balance sheet? Why or why not?
6. Refer to Note 7-Commitments and Contingencies, under Obligations Under Operating Leases. Describe the company's commitments under operating lease arrangements. Calculate the impact on Under Armour, Inc.'s, ROA and debt ratios if the company's operating lease commitments as of the end of 2014 were capitalized.
7. For 2014, compute the company's debt ratio, leverage ratio, and times-interest-earned ratio. Would you evaluate Under Armour, Inc., as risky, safe, or average in terms of these ratios?
8. Access Under Armour, Inc.'s, most recent financial statements from www.sec.gov. Use the same method as described in the chapter opening for Southwest Airlines. What has happened to Under Armour, Inc.'s, debt position since the end of 2014? (Challenge)