Finance Analysis

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Analysis of the financial data for Under Armour Inc. & Nike Inc. 1. Liquidity
| Comparison between Nike & Under Armour|
| 2010| 2009|
Current Ratio| •Both companies have a ratio that is higher than the dangerous 1.0 current ratio.•The current Ratio of Under Armour is a bit higher than Nike`s which means that Under Armour is more efficient in terms of the operating cycle or in other words the ability to turn its products into cash.| •Both companies have a ratio that is higher than the dangerous 1.0 current ratio.•The current Ratio of Under Armour is a bit higher than Nike`s which means that Under Armour is more efficient in terms of the operating cycle or in other words the ability to turn its products into cash.| Acid Test| • Both companies have a ratio higher than the dangerous 1.0 acid test ratio. Both companies are able to pay their current liabilities. • This test shows that Nike is more financially stable and Under Armour lost its lead based on this test.• Another conclusion that can be based on this test is that Under Armour`s current assets are more dependent on inventory than Nike`s current assets. Nike continues its lead based on this test.| • Both companies have a ratio higher than the dangerous 1.0 acid test ratio. Both companies are able to pay their current liabilities.• This test shows that Under Armour is more financially stable.• Another conclusion that can be based on this test is that Under Armour`s current assets are more dependent on inventory than Nike`s current assets|

Conclusion: Basing ourselves on the acid test ratio we concluded that both companies have no liquidity issues and are able to maintain their liquidity far above the required minimum. There was a change in the leading position from 2009-2010. Nike improved their liquidity and took the lead. Another conclusion about the business styles of the two companies is the fact that Under Armour keeps a higher dependency of current assets on inventory,...
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