ACCT504 Week 7 A Financial Statement Analysis

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A Comparative Analysis of Nike, Inc. and Under Armour, Inc.

Below is the link for the financial statements for Nike, Inc. for the fiscal year ending 2014. First, select 2014using the drop-down arrow labeled Year, and then select Annual Filings using the drop-down arrow labeled All.

You should select the 10k dated 7/25/2014,and choose to download in PDF, Word, or Excel format.

http://investors.nike.com/investors/news-events-and-reports/?toggle=filings

Below is the link for the financial statements for Under Armour, Inc. for the fiscal year ending 2014.

First, select Annual using the drop-down arrow labeled View, and then select 2015 using the drop-down arrow labeled Year.

You should select the 10k dated 2/20/2015, and choose to download it in PDF or Excel format.

http://www.uabiz.com/sec.cfm

A sample project template is available for download from the Course Resources page’s Course-Specific Resources section.The sample project compares the ratio performance of Tootsie Roll and Hershey using the 2014 financial statements of Tootsie Roll and Hershey provided at their websites.

Description

This course contains a Course Project, where you will be required to submit one draft of the project at the end of Week 5, and the final completed project at the end of Week 7. Using the financial statements for Nike, Inc. and Under Armour, Inc.,respectively, you will calculate and compare the financial ratios listed further down this documentfor the fiscal year ending 2014, and prepare your comments about the two companies’performancesbased on your ratio calculations. The entire project will be graded by the instructor at the end of the final submission in Week 7, and one grade will be assigned for the entire project.

ACCT504 Week 7 A Financial Statement Analysis

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Overall Requirements

For the Final Submission:

Your final Excel workbook submission should contain the following. You cannot use any other software but Excel to complete this project.

1. A Completed Worksheet Title Page tab, which is really a cover sheet with your name, the course, the date, your instructor’s name, and the title for the project.
2. A CompletedWorksheetProfiles tab which contains a one-paragraph description regarding each company with information about their history, what products they sell, where they are located,and so forth.
3. All 16 ratios for each company with the supporting calculations and commentary on your Worksheet Ratio tab. Supporting calculations must be shown either as a formula or as text typed into a different cell.The ratios are listed further down this document. Your comments for each ratio should include more than just a definition of the ratio.You should focus on interpreting each ratio number for each company and support your comments with the numbers found in the ratios.You need to specifically state which company performed better for each ratio.
4. The Summary and ConclusionsWorksheet tab is an overall comparison of how each company compares in terms of the major category of ratios described in Chapter 13 of your textbook.A nice way to conclude is to state which company you think is the better investment and why.
5. The Bibliography Worksheet tab must contain at least your textbook as a reference. Any other information that you use to profile the companies should also be cited as a reference.

Required Ratios for Final Project Submission

1. Earnings per Share of Common Stock
2. Current Ratio
3. Gross (Profit) MarginPercentage
4. Rate of Return (Net Profit Margin) on Sales
5. Inventory Turnover
6. Days’ Inventory Outstanding (DIO)
7. Accounts Receivable Turnover
8. Days’ Sales Outstanding (DSO)
9. AssetTurnover
10. Rate of Return on Total Assets (ROA)
11. Debt Ratio
12. Times-Interest-Earned Ratio
13. Dividend Yield[For the purposes of this ratio, use Yahoo Finance to look up current dividend per share and stock price; just note the date that you looked up this information.]
14. Rate of Return on Common Stockholders’ Equity (ROE)
15. Free cash flow
16. Price-Earnings Ratio (Multiple) [For the purpose of this ratio, for Nike, use the market price per share on May 30, 2014,and for Under Armour, use the market price per share on December 31, 2014.]

The Excel files uploaded in the Dropboxes should not include any unnecessary numbers or information (such as previous years’ ratios, ratios that were not specifically asked for in the project, etc.).

Please upload your final submission to the Week 7 Dropbox by the Sunday ending Week 7.

For the Draft:

Create an Excel spreadsheet or use the project template to show your computations for the first 10 ratios listed above. The more you can complete regarding the other requirements, the closer you will be to completion when Week 7 arrives. Supporting calculations must be shown either as a formula or as text typed into a different cell. If you plan on creating your own spreadsheet, please follow the format provided in the Tootsie Roll and Hershey template file.

Please upload your draft submission to the Week 5 Dropbox by the Sunday at the end of Week 5.

Other Helpful Information:

ACCT504 Week 7 A Financial Statement Analysis

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If you feel uncomfortable with Excel, you can find many helpful tutorials on Excel by performing a Google search.

Chapter 13 contains ratio calculations and comparison comments related to Apple and Dell, so you will likely find this information helpful.

BigCharts.com provides historical stock quotes.

Either APA or MLA style can be used to complete the references on your Bibliography tab. There is a tutorial for APA and MLA style within the Plagiarism link, which can be accessed through the Syllabus
Go to the Course Resources page within the Course-Specific Resources section. The Course Resources page is under Course Home.

Complete your Title page on this tab.

Please include your name, the course, the date,
your instructor’s name, and the title for the project.

Complete one paragraph, profiling each company’s business, including information such as a brief history, where they are located, number of employees, the products they sell, and so forth. Please reference any websites that you used for the Profiles on the Bibliography tab.

Tootsie Roll Industries began in a small candy store in New York in 1896. Tootsie Roll is now headquartered in Chicago and primarily sells their products in the United States, Canada, and Mexico. According to Yahoo Finance, Tootsie Roll has 2,000 full-time employees. Tootsie Roll sells the following branded candy: Tootsie Roll, Tootsie Roll Pop, Charms Blow Pop, Mason Dots, Andes, Sugar Daddy, Charleston Chew, Double Bubble, Razzles, Caramel Apple Pop, and Junior Mints. Tootsie Roll had 2014 net product sales of $539.9 million.

Hershey Company was founded by Milton S. Hershey in 1893 and is headquartered in Hershey, Pennsylvania. According to Yahoo Finance, Hershey has 20,800 full-time employees. Hershey is famous for Good & Plenty, Hershey Bar, Hershey’s Kisses, Hershey’s Bliss, Reese’s, Rolo, Twizzlers, Almond Joy, Kit Kat, and Ice Breakers. Hershey had net product sales of $7.4 billion for 2014.
Use this Excel spreadsheet to compute ratios; show your computations for all ratios on this tab, and also include your commentary.
The 2014 financial statements used to calculate these ratios are available in the Investor Relations section of the Tootsie Roll and Hershey websites.

Tootsie Roll Hershey Interpretation and comparison between the two companies’ ratios (reading Chapter 13 will help you prepare the commentary).
The comparison of the ratios is an important part of the project. A good approach is to briefly explain what the ratio tells us. Indicate whether a higher or lower ratio is better. Then compare the two companies on this basis. Remember—each ratio below requires a comparison.
Earnings per Share of Common Stock (basic – common) As given in the income statement ## $ 3.91

ACCT504 Week 7 A Financial Statement Analysis

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Current Ratio Current assets ###### = ## = 1.16
Current liabilities ######

Gross (Profit) Margin Percentage Gross margin ###### = ## = 45.0%
Net sales ######

Rate of Return (Net Profit Margin) on Sales Net income ###### = ## = 11.4%
Net sales ######

Inventory Turnover Cost of goods sold ###### 5.2 5.6
Average inventory ###### times times

Days’ inventory outstanding (DIO) 365 365 = 71 = 65
Inventory turnover 5.2 days days

Accounts Receivable Turnover Net sales (assume all sales are credit sales) ###### = ## = 13.8
Average net accounts receivable ######

Days’ Sales Outstanding (DSO) 365 365 = ## = 26.4
Accounts receivable turnover 12.9 days days

Asset turnover Net sales ###### = ## = 1.35
Average total assets ######

Rate of Return on Total Assets (ROA) Rate of return on sales times asset turnover = ## = 15.4%

Debt Ratio Total Liabilities ###### = ## = 73.0%
Total Assets ######

Times-Interest-Earned Ratio Income from operations ###### = ## = 16.6
Interest expense $99

Dividend Yield Dividend per share of common stock (Yahoo Finance 12/24/2015) $0.36 = ## = 2.6%
(Please follow the Course Project instructions to calculate the current dividend yield.) Market price per share of common stock (Yahoo Finance 12/24/2015) $32.04

Rate of Return on Common Stockholders’ Equity (ROE) Net income – Preferred dividends ###### = ## = 54.0%
Average common stockholders’ equity ######

Free cash flow Net cash provided by operating activities minus cash payments earmarked for investments in plant assets = ## ######
=

Price-Earnings Ratio (Multiple) Market price per share of common stock as of 12/31/2014 $30.65 = 29 = 27
(Please see the Course Project instructions for the dates to use for this ratio.) Earnings per share $1.05