Refer to Under Armour, Inc.'s, consolidated financial statements in Appendix B and online in the filings section of www.sec.gov. Show amounts in millions and round to the nearest $1 million.
Requirements
1. Three important pieces of inventory information are (a) the cost of inventory on hand, (b) the cost of goods sold, and (c) the cost of inventory purchases. Identify or compute each of these items for Under Armour, Inc., at December 31, 2014.
2. Which item in requirement 1 is most directly related to cash flow? Why? (Challenge)
3. Assume that all inventory purchases were made on account and that only inventory purchases increased Accounts Payable. Compute Under Armour, Inc.'s, cash payments for inventory during 2014.
4. See Note 2 Summary of Significant Accounting Policies, Inventories section. How does Under Armour, Inc., value its inventories? Which costing method does Under Armour, Inc., use?
5. Did Under Armour, Inc.'s gross profit percentage and rate of inventory turnover improve or deteriorate in 2014 (versus 2013)? Consider the overall effect of these two ratios. Did Under Armour, Inc., improve during 2014? How did these factors affect the net income for 2014?