03.07.2022 - 21:00

# The following data (in thousands) were taken from recent financial statements of Under Armour, Inc.: December31 year 2year 1 current assets$689,663$558,850 current liabilities183,607149,147 A. Compute

Question:

The following data (in thousands) were taken from recent financial statements of Under Armour, Inc.:

December 31
Year 1 Year 2
current assets $689,663$558,850
current liabilities $183,607$149,147

A. Compute the working capital and the current ratio as of December 31, Year 2 and Year 1. Round to two decimal places.

B. What conclusions concerning the company’s ability to meet its financial obligations can you draw from part (a)?

A. Working capital Year 1 = current assets Year 1 - current liabilities Year 1 = $689,663 -$183,607 = $506,056 Working capital Year 2 = current assets Year 2 - current liabilities Year 2 =$558,850 - $149,147 =$409,703 Current ratio Year 1 = current assets Year 1 / current liabilities Year 1 = $689,663 /$183,607 = 3.76 Current ratio Year 2 = current assets Year 2 / current liabilities Year 2 = $558,850 /$149,147 = 3.75 B. The working capital has decreased from Year 1 to Year 2, indicating that the company has less funds available to meet its short-term obligations. However, the current ratio has remained relatively stable, with only a slight decrease. This suggests that the company is still able to meet its financial obligations. However, further analysis of the company's financial statements would be needed for a more comprehensive assessment of its financial health.
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