Nike Vs Under Armour Essay
Based on the profitability of Nike and Under Armour, I believe that NIKE is more efficient in generating profit than Under Armour because of these reasons: First, based on the net profit margin, Nike is 10.70 percent compared to Under Armour which is 6.75 percent. Nike has a higher net profit margin than Under Armour. However, Under Armour had more of a gross profit margin than Nike.
Second, Nike has a higher fixed asset turnover ratio, which means that they can generate revenue more effectively by using the investment in fixed assets that they have. Nike also has a high fixed asset ratio which gives them the ability to ability to generate net sales from fixed-asset investments. The most important reason for Nike’s profitability is their earnings per share, which tells us how excellent the company manages the performance and high capable dividends. Nike has an earnings per share of $3.80 compared to Under Armour’s earnings per share of $0.98. Nike also has a higher return on equity than Under Armour which tells us that the company is more efficient at producing a return for their …show more content…
The Nike’s debt to assets ratio is 0.41 and Under Armour’s is 0.36. Nike has a higher debt to assets ratio than Under Armour so, since Nike has the higher debt to asset ratio, Nike’s financing strategy is more hazardous than Under Armour’s company. However, both of the companies have debt to assets ratio less than 0.5, so both of them are more heavily financed by stockholders. The other reason used is times interest earned which describes whether the company’s earnings are able to meet their debt accountability. Both of the company’s time’s interest earned is available in the 10-K report. Nike has 151.18 and Under Armour has 65.14 so the Under Armour has less of an ability to pay for their
Second, Nike has a higher fixed asset turnover ratio, which means that they can generate revenue more effectively by using the investment in fixed assets that they have. Nike also has a high fixed asset ratio which gives them the ability to ability to generate net sales from fixed-asset investments. The most important reason for Nike’s profitability is their earnings per share, which tells us how excellent the company manages the performance and high capable dividends. Nike has an earnings per share of $3.80 compared to Under Armour’s earnings per share of $0.98. Nike also has a higher return on equity than Under Armour which tells us that the company is more efficient at producing a return for their …show more content…
The Nike’s debt to assets ratio is 0.41 and Under Armour’s is 0.36. Nike has a higher debt to assets ratio than Under Armour so, since Nike has the higher debt to asset ratio, Nike’s financing strategy is more hazardous than Under Armour’s company. However, both of the companies have debt to assets ratio less than 0.5, so both of them are more heavily financed by stockholders. The other reason used is times interest earned which describes whether the company’s earnings are able to meet their debt accountability. Both of the company’s time’s interest earned is available in the 10-K report. Nike has 151.18 and Under Armour has 65.14 so the Under Armour has less of an ability to pay for their