ACCT 6015 Project 1 S 
ACCT 6015
PROJECT 1: UNDER ARMOUR
PRANIL BALRAM
NAZAR BASHAMOV
SAM LEE
MATT STIMSON
KEITA TAKARADA
18 NOVEMBER 2014
1. We chose to study Under Armour because of their explosive growth over the last five years in a very competitive industry. From a marketing standpoint, it is quite apparent that the company is doing well and one could assume that because the firm appears to have had great success in aggressively expanding their market share, they are by extension creating value for investors. By studying the financial information, we aimed to confirm or deny whether Under Armour is indeed creating value.
2. Under Armour is incorporated in Maryland
3. Under Armour is registered on the New York Stock Exchange as “UA”
4. Under Armour’s main industry is Apparel, Accessories, and Luxury Goods
5. The common stock has a $0.0003 1/3 par value.
6. Under Armour has no preferred stock.
7. ROE for the last three years using average common equity in the denominator:
2013
2012
2011
ROE
0.174
0.177
0.171
Calculation
8. We cannot determine whether the firm is creating value for its stockholders based on the trend in ROE alone. This figure must be compared with the cost of equity capital in order to make a determination on value creation. However, just by looking at the trend, Under Armour has a relatively stable return on equity in recent years.
9. There was no information readily available for Under Armour’s cost of equity. Calculating cost of equity with the traditional dividend capitalization model is not feasible because there were no cash dividends declared or paid during the past two years. In fact, Under Armour reports in their 2013 Annual Report that they “currently anticipate retain[ing] any future earnings for use in [their] business. As a result, [they] do not anticipate paying any cash dividends in the foreseeable future.” It is possible, however, to estimate the cost of equity using the capital asset pricing model. We used the
PROJECT 1: UNDER ARMOUR
PRANIL BALRAM
NAZAR BASHAMOV
SAM LEE
MATT STIMSON
KEITA TAKARADA
18 NOVEMBER 2014
1. We chose to study Under Armour because of their explosive growth over the last five years in a very competitive industry. From a marketing standpoint, it is quite apparent that the company is doing well and one could assume that because the firm appears to have had great success in aggressively expanding their market share, they are by extension creating value for investors. By studying the financial information, we aimed to confirm or deny whether Under Armour is indeed creating value.
2. Under Armour is incorporated in Maryland
3. Under Armour is registered on the New York Stock Exchange as “UA”
4. Under Armour’s main industry is Apparel, Accessories, and Luxury Goods
5. The common stock has a $0.0003 1/3 par value.
6. Under Armour has no preferred stock.
7. ROE for the last three years using average common equity in the denominator:
2013
2012
2011
ROE
0.174
0.177
0.171
Calculation
8. We cannot determine whether the firm is creating value for its stockholders based on the trend in ROE alone. This figure must be compared with the cost of equity capital in order to make a determination on value creation. However, just by looking at the trend, Under Armour has a relatively stable return on equity in recent years.
9. There was no information readily available for Under Armour’s cost of equity. Calculating cost of equity with the traditional dividend capitalization model is not feasible because there were no cash dividends declared or paid during the past two years. In fact, Under Armour reports in their 2013 Annual Report that they “currently anticipate retain[ing] any future earnings for use in [their] business. As a result, [they] do not anticipate paying any cash dividends in the foreseeable future.” It is possible, however, to estimate the cost of equity using the capital asset pricing model. We used the