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General Situation

As a sporting goods company, Under Armour has done well and managed to acquire a leading position on the North Americans sporting goods market amid fierce competition from such world renowned companies as Nike. The revenue of the company has increased by 24% as evidenced by the overall performance of the business (Thompson, Peteraf, Gamble, & Strickland III, 2013). Additionally, it is evident that the company is growing, so there is a need for the management to focus on reducing or completely eliminating weaknesses, while maximizing on the strengths and exploring the opportunities.

Despite its considerable achievements, Under Armour has faced a few challenges during the last five years, which include difficulties related to establishing itself as a global brand. Despite the unfortunate setbacks in its pursuits, the company has continued to show considerable growth in its revenue. Observations have shown that every quarter the company has managed to report a growth of 20% (Thompson et al., 2013). This growth is interpreted as phenomenal for a company operating in an industry that is highly competitive.

The stock price of Under Armour is around ?75 million (Thompson et al., 2013). This is evidence that there is potential for growth and the investors have faith in the company. Although it is viewed by many economists as overvalued, there are several clear indications that the investors and the market have confidence in the potential of Under Armour as a company to grow and achieve further success. Despite all this, the net deals expanded by ?411.5M or 40.2% from the earlier year largely due to a 62.2% expansion in direct shopper deals. In the meantime, there was a huge diminishing of license incomes which went down by 7.1% or ?2.8M (Thompson et al., 2013). Due to the weakening of the dollar, there is a fear that Under Armour might face disturbances in its strategic growth. However, with the help of a well developed business plan the management was able to effectively tackle the issue.

In general, the company increased the prices of its products. Over the last five years, a wide range of variations related to the price structure was implemented by the company. Eventually, these increases in price and variations have resulted in revenue growth. In the long run, this might lead to Under Armour overtaking its rivals. The revenue and growth of the company over the past several years is a proof that the company is in its growth stage. The expansion of the company to international markets is the key to ensuring that the company is able to compete with international brands, which is an important aspect of the growth of the company.

Financial Situation

The financial situation of a company provides the basis through which investors, creditors, and any other parties interested in working with a particular company decide whether or not do so. It clearly indicates how the company is doing and what it is likely to achieve in future. In order to understand the financial situation of a company, one needs to analyze some or all of the fundamental financial ratios of the company. Financial ratios include leverage, activity, profitability, and liquidity.

Profitability ratios are a representation of the earning capacity of a company in comparison with its expenditures. The profitability ratio of Under Armour has been increasing significantly as depicted in the company’s financial data for 2008-2012. It is clear that between the year 2008 and the year 2012 there has been a positive trend in gross profits from $353,041,000 to 879,297,000 (Thompson et al., 2013). This is a clear proof that the overall assets of the company have been increasing. On the other hand, the ratio of the interest earned clearly indicates that revenue generation of the company has been positive. The cumulative debts of Under Armour against the total equity of the shareholders is represented by the debt to equity ratio. According to the evaluation, the company is doing fine.

Liquidity is defined as the availability of assets that exists in liquid form. Liquid assets comprise of working capital and available cash. According to ‘The selected financial data for Under Armour, Inc., 2008-2012’, there has been growth in liquid assets between the year 2008 and 2012. It has grown from $365,055,000 to $993,211,000 over the period (Thompson et al., 2013). The growth of the company’s liquidity has almost tripled during the four years. This a clear indication that the company is performing well in the industry.

Leverage is a depiction of how capable a company is in fulfilling its financial obligations. It is a very important financial ratio for any company, because it clearly forecasts the future of a business. Under Armor has been able to keep its leverage ratio in check, owing to the fact that its total capital lease obligations and debts have grown from $45,591,000 to just $61,889,000 between the year 2008 and 2012 (Thompson et al., 2013). From the data, we can clearly conclude that the company does not heavily dependent on creditors.

Activity ratio refers to a financial analysis tool that seeks to gauge how easy it is for a company to convert its assets, capital accounts, and liability into sales or cash. Going by the upward trend in sales and revenue that Under Armour has exhibited, it is clear that its activity ratio is passable.

Under Armour has exhibited a positive trend in revenue and profitability. The company’s revenue has grown from $725,244,000 to 1,834,921,000 between the years 2008 and 2012 (Thompson et al., 2013), That means that it has doubled. Profitability has also grown as shown above. This is a clear indication that with proper exploration of its current opportunities and maximization of its strengths, the company will achieve and even surpass its targets.

The primary financial indicators discussed above are a clear proof that Under Armour is doing very well financially in the present. The profitability and revenue figures indicate that the company should improve on what it is doing currently through such initiatives as expanding the market. By doing so, it will achieve exemplary success in the future.

SWOT Analysis

A SWOT analysis is an attempt to explore the strengths, weaknesses, opportunities, and threats of a company. Understanding the four aspects is key to managing a company, both in decision making and strategic planning. SWOT as an assessment tool enables the exploration of solutions to problems, exploration of new efforts, determination of the possibility of change, and revelation of positive forces. Below is a SWOT analysis of Under Armour.

Strengths

The extensive range of products offered by Under Armour is its prime strength. The company has focused on innovation, and this has enabled it to gain an upper hand in the market. They are able to produce products for specific sporting activities. The new trend of producing apparels to suit different weathers that the company has introduced on the market is also a strength. The company has been keen to respond to market changes. All these strengths give the company an edge on the market. As such, it is important that the company focuses and capitalizes on them in order to increase profitability and ensure growth in revenue.

Weaknesses

Under Armour, like any other large corporation, faces a number of weaknesses. One major weakness lies in its limited reach regarding international markets. Most of the company’s operations are limited to North America, a market that is flooded by products from competitors such as Nike and Adidas. A small number of distributors is another weakness that harms Under Armour. This lack of widespread distributors forces the company to hold a lot of inventory, which in turn raises its running costs.

Opportunities

Under Armour has a number of opportunities that would lead to a rise in sales if well concentrated on and can consequently increase profitability. Such opportunities include product customization with the aim of reaching specific groups on the market, introduction of new products to wider international markets, and market expansion through public awareness creation and advertisement. Successful exploration of these opportunities will definitely lead to increased sales, improved revenues, and can even boost profitability.

Threats

One of the most common threats for most companies is competition. Under Armour is no exception, as it faces stiff competition from leading companies such as Nike and Adidas. Competition manifests in various aspects that include pricing, performance, service product development, customer support, reliability, promotion, and marketing.

According to the SWOT analysis above, it is clear that the company operates in a market that requires it to adapt by identifying its strengths and opportunities and working on them, while minimizing its weaknesses and tackling its threats at the same time.