Homework #2 - Financial Statements and Ratios

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University of Louisville *

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604

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Economics

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Feb 20, 2024

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SPAD 604 – Sport Finance & Economics Assignment #2 – Financial Statements and Ratios Point Value: 10 points Instructions: For this assignment, you will use financial data from annual 10-K reports to calculate financial ratios and assess the overall financial health of companies in the athletic apparel industry. In specific, you will examine the financial health of the following athletic apparel companies (annual financial reports located in the “Annual 10-K Reports” folder on Blackboard):  Nike  Under Armour  Lululemon Athletica Financial Ratio Calculations Within a company’s Annual 10-K Report, locate the Consolidated Statement of Income (sometimes called a Consolidated Statement of Operations) and Consolidated Balance Sheet. Use the “Financial Ratios Calculator” MS Excel workbook to enter appropriate line items from the Income Statement and Balance Sheet and calculate the following financial ratios for the two most recent fiscal years included in the annual report :  Current Ratio  Quick Ratio  Cash Ratio  Total Asset Turnover Ratio  Average Collection Period  Debt Ratio  Net Profit Margin Ratio  Return on Assets Ratio  Return on Equity Ratio After calculating these financial ratios for the company’s two most recent fiscal years, create a table outlining your results. You table should look something similar to the following: [Company Name] Ratio Year End: MM/DD/YYYY Year End: MM/DD/YYYY Current Ratio Quick Ratio Cash Ratio Total Asset Turnover Ratio Avg Collection Period Debt Ratio Net Profit Margin Ratio Return on Assets Ratio Return on Equity Ratio

Discussion Questions Based on the work completed for this assignment, you will answer the following questions on Blackboard by Friday, January 26 th at 11:59pm EST to receive credit for this assignment. Please note: When I grade your homework, I will only be grading your responses to these three questions below. All your financial ratio calculations are yours to keep, but they should be incorporated into your written response to these questions to justify the company’s financial health. 1) Assess the overall financial health of Nike for its most recent fiscal year. Use optimal ratio levels, company history, and/or comparisons with competition to justify and explain your financial health assessments. Your financial health assessment should be divided into four distinct parts: liquidity ratios, activity ratios, leverage ratios, and profitability ratios. 2) Assess the overall financial health of Under Armour for its most recent fiscal year. Use optimal ratio levels, company history, and/or comparisons with competition to justify and explain your financial health assessments. Your financial health assessment should be divided into four distinct parts: liquidity ratios, activity ratios, leverage ratios, and profitability ratios. 3) Assess the overall financial health of Lululemon Athletica for its most recent fiscal year. Use optimal ratio levels, company history, and/or comparisons with competition to justify and explain your financial health assessments. Your financial health assessment should be divided into four distinct parts: liquidity ratios, activity ratios, leverage ratios, and profitability ratios.

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