Discussion Post
Requirement 1
Focus on cash and cash equivalents. Why did cash and cash equivalents change during 2014? The statement of cash flows holds the answer to this question. Analyze the seven largest individual items on the statement of cash flows (not the summary subtotals such as “net cash provided by operating activities”). For each of the seven individual items, state how Under Armour’s actions affected cash. Show amounts in millions and round to the nearest $1 million. (Challenge)
Numbers below are in 000s
Cash increased from $347,498 (Dec 31, 2013) to $593,175 (Dec 31,2014)
- Y/Y net income increase = 46,072 (from $162,330 (Dec 31, 2013) to 208,402 (Dec 31,2014)) increased cash and cash equivalents
- Depreciation and amortization expense = $72,093 increased cash and cash equivalents via operating activities
- Accounts receivable = $101,057 decreased cash and cash equivalents via operating activities
- Inventories = $84,658 decreased cash and cash equivalents via operating activities
- Purchases of private property and equipment = $140,528 decreased cash and cash equivalents amount via investment activities
- Payments on revolving credit facility = $100,000 decreased cash and cash equivalents via financing activities
- Proceeds from term loan = $250,000 increased cash and cash equivalents via financing activities
Requirement 2
Refer to Exhibit 4-2 on page 205 that contains the Report of Management on Internal Control over Financial Reporting. Under Armour, Inc. has a similar report included in its annual report. Show how this report corresponds to the objectives of internal control included in this chapter. (Challenge)
The Financial Statement and Supplemental Data (Item 8) section of Under Armour’s Annual report states that “Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.” This depicts what the text calls “tone at the top”. This section also states that “This evaluation included the review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation”, this depicts control procedures and monitoring controls. There is clearly a correspondence between what is conveyed here and what is outlined in chapter four of the text.
References
Under Armour Annual Report. (n.d.). Retrieved May 18, 2017, from http://investor.underarmour.com/annuals.cfm
Assignments
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