Finance Analysis Essay

Nike continues its lead establish on this test. both companies grow a proportionality high than the dangerous 1. 0 acid test symmetry. Both companies be able to pay their current liabilities. This test manoeuvers that downstairs armor is more financially stable. An early(a) conclusion that can be based on this test is that Under fits current assets be more dependent on inventory than Nikes current assets terminal Basing ourselves on the acid test ratio we concluded that both companies have no liquid state issues and ar able to maintain their runniness far-off to a higher place the required minimum. in that respect was a change in the tip position from 2009-2010. Nike improved their liquidity and took the lead. Another conclusion about the cable styles of the two companies is the fact that Under fit out keeps a higher(prenominal) colony of current assets on inventory, which is more typical for retail store businesses. 2. profitability Comparison amidst Nike & Under Armour 2010 2009 Gross earnings Margin The gross profit gross profit margin of both companies is almost the same. passive Under Armour show a higher GPM than Nike.There are no large fluctuations in the GPM which is always a good score for the stability of the companies. The gross profit margin of both companies is almost the same. cool off Under Armour show a higher GPM than Nike. authorize simoleons Margin Nike leads in the net profit margin categoryThere is an apparent fight between the attractorship in GPM and NPM Nike leads in the net profit margin categoryThere is an apparent difference between the leadership in GPM and NPM Ratio of Net Sales to pluss Under Armour leads in this categoryUnder Armour has a higher effectiveness of assets in respect to sales. Under Armour leads in this categoryUnder Armour has a higher effectiveness of assets in respect to sales order Earned on Total Assets Nike is the leader in this categoryNike maintains a higher return on its investments which means that its counsel team is more effective. Nike is the leader in this categoryNike maintains a higher return on its investments which means that its management team is more effective. Conclusion Both companies show a epic gross profit margin during both years.The lack of fluctuations in the GPM suggests that there were no major changes in the sports apparel industry and its development is sensibly stable. The huge differences in net profit margin show that the trade/administration cost of sports apparel companies are big. This also implies that operating costs and cost of goods sold of sports apparel companies is relatively low. Under Armour has a lower Rate Earned on Total Assets and a small growth based on a year to year comparison. This whitethorn be a result of bad managerial decisions or little effective managerial team.Based on the leverage Nike is a get around choice for investment in comparison to Under Armor. 3. Solvency Comparison between Nike & Under Armour 2010 2009 Solvency Ratio Both companies have solvency ratios that are far above the critical 20%. Nike has a little kidnapping higher solvency ratio than Under Armour. The problem is that the solvency ratio of Nike has fallen with almost 2% for one year. Both companies have solvency ratios that are far above the critical 20%. Nike has a little bit higher solvency ratio than Under Armour. Working Capital Nike has a much larger functional capital which is understandable based on the size of the two companies. thus far Under Armour shows a larger percentage increase in Working Capital in comparison to 2009 (UA 24% Increase, NIKE 18% Increase) Nike has a much larger working(a) capital which is understandable based on the size of the two companies. Conclusion Nike & Under Armour show a high solvency ratio which means that they are capable of coming together their debt obligations. The solvency ratio in Under Armour is lower, but on the other ha nd the company shows a fairly constant rise in these criteria.Nike lost some of its solvency during 2010. The size of the two companies and the stage of development in which they are result in large differences in the amount of working capital. Again Under Armour shows a higher growth of working capita, 24% compared to the 17% growth in Nike. 4. immediate payment merge enough Comparison between Nike & Under Armour 2010 2009 Cash flow enough ratio Nike clears its silver problems and increases its cash flow adequacy ratio to a adequate level. In contrast Under Armour loses its gain and falls below the critical 1. ratio. A bless of potential liquidity problems in the future. Under Armour showed a sufficient amount of cash to cover its obligation during the year. In comparison Nike dismiss under the 1. 0 level which is a sign of potential liquidity problems Conclusion There are a lot of changes in both companies based on these criteria. Nike raised their cash flow adequacy ratio to normal levels that may increase the trust in the company. On the other hand Under Armour shows a disturbing 2010 Cash Flow adequacy ratio that may be a sign for future liquidity problems. . Asset utilization Comparison between Nike & Under Armour 2010 2009 Cash flow adequacy ratio Nike clears its cash problems and increases its cash flow adequacy ratio to a sufficient level. In contrast Under Armour loses its advantage and falls below the critical 1. 0 ratio. A sign of potential liquidity problems in the future. Under Armour showed a sufficient amount of cash to cover its obligation during the year. In comparison Nike fell under the 1. 0 level which is a sign of potential liquidity problems