1. Which was larger for Under Armour, Inc. during 2014: (1) sales revenue, or (2) cash collected from customers? Why? Show computation. (Challenge)
2014 Sales revenue = $3,084,370 > Cash collected from customers in 2014 = $3,014,487
2. Investors are vitally interested in a company’s sales and profits and its trends of sales and profits over time. Consider Under Armour, Inc.’s sales and net income (net loss) during the period from 2012 through 2014. Compute the percentage increase or decrease in net sales and also in net income (net loss) from 2012 to 2014. Which item grew faster during this two-year period—net sales or net income (net loss)? Can you offer a possible explanation for these changes? (Challenge)
Net sales (revenue) grew faster than net income.
A potential explanation for income growth not keeping pace with or outgrowing revenue growth is expense increases which grew at a greater rate than revenue.
Note: Detailed calculations and explanations contained in the attached spreadsheet.