Chapter 7, Problem 7.4ADM

Nike, lululemon, and Under Armour: Days’ cash on hand

Three companies that compete in the athletic and activewear market segment are Nike, Inc., lululemon athletica inc., and Under Armour, Inc. Nike is the largest designer and seller of athletic footwear and apparel in the world. Lululemon designs and sells technical athletic apparel featuring yoga, fitness, and dance-inspired wear. Under Armour designs and sells athletic apparel featuring high-performance fabrics for men and women around the world. Selected financial information for a recent year follows (in millions):

	Nike	lululemon	UnderArmour
Balance sheet:
Cash	$ 2,220	$ 664	$ 593
Temporary investments	2,922
Income statement:
Operating expenses	8,766	538	1,158
Depreciation expense	518	58	72
Total revenues	27,799	1,797	3,084

• A. How does the size of these companies, as represented by total revenues, compare

to each other?

• B. Compute the days’ cash on hand for all three companies. (Round all calculations to one decimal place.)
• C. Comment on the cash sufficiency for these three companies.
• D. Which company appears to have the greatest cash liquidity?
• E. Why is a ratio used to compare cash sufficiency across the three companies rather than just the companies’ cash balances?