Financial Performance Management: Ratio Analysis, Balanced Scorecard, and Integrated Reporting

This report discusses financial performance management through ratio analysis, balanced scorecard, and integrated reporting. It includes a case study on Under Armour and Nike, comparing their financial ratios. The report emphasizes the importance of financial statements and forecasting for cost-effective approaches. It also discusses the advantages and disadvantages of using the balanced scorecard approach.

Financial performance
management

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Question 1: Financial Performance Using Ratio Analysis..........................................................1
Question 2: Balanced Scorecard..................................................................................................4
Question 3: Integrated Reporting.................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10
APPENDIX....................................................................................................................................11

INTRODUCTION
From the report prepared as under it can be said that it would prove to be helpful for
business and company for computation of ratios and carrying out its analysis. It explains the use
of balanced scorecard which can be denoted and analysed with the help of getting through the
accounting records and statements would be prepared and maintained as well. It would take in
account the reflection of the report and the financial performance of the company over a time
span in competitive environment and how it would prove to be beneficial in coming days. It also
counts the importance of financial statements being prepared which would be helpful in
predicting future course of action and forecasting as what can be done and how it can be done in
a cost effective based approach.
MAIN BODY
Question 1: Financial Performance Using Ratio Analysis
Under Armour is the primary company chosen for ratio analysis, and its financial
performance is compared to vs. its closest competitor, Nike. Under Armor is a well-known
US manufacturer of sports apparel, casual clothing, and sporting shoes (Alziyadat and Ahmed,
2019). Nike is the largest participant in the workout gear and apparel industry and that is why we
chose both of these companies for a financial report analysis. The financial ratios of Under
Armour and Nike are shown below-
FINANCIAL RATIOS
Particulars Under Armour Nike
2018 2019 2018 2019
Liquidity Ratios
Current Ratio 1.971 1.900 2.506 2.101
Quick Ratio 1.196 1.273 1.196 1.273
Cash Ratio 0.424 0.554 0.703 0.568
Working Capital Ratios
WC Turnover 4.065 4.114 4.002 4.517
Profitability Ratios
Gross Margin 45.07% 46.90% 43.84% 44.67%
Operating Margin 3.04% 4.50% 12.21% 12.20%

Net Margin -0.89% 1.75% 5.31% 10.30%
Return on Assets -1.09% 1.90% 8.58% 16.99%
Return on Equity -2.30% 4.29% 19.70% 44.57%
Leverage Ratios
Debt Ratio 0.525 0.556 0.565 0.619
Debt to Equity 1.105 1.253 1.297 1.624
Valuation Ratios
Dividend Yield 0.00% 0.00% 1.02% 0.95%
Earnings Per Share -0.10 0.20 1.19 2.55
Price-Earnings Ratio - 89.800 67.445 37.408
189.400
 Ratios of Leverage- "Investment structuring" looks at how a company divides its assets
and obligations among various financial tools, and also the links among obligations and
shops. Both Under Armour and Nike have a comparable responsibility to enhance ratio
over time (Aureli, Magnaghi and Salvatori, 2019). Under Armour and Nike have
commitment levels which are similar to a certain extent, indicating that both companies
have such a solid resource expansion strategy. Furthermore, Nike's Debt to Equity ratio is
higher than Under Armour's, indicating that Nike has been more aggressive in using
financial assistance to subsidise its growth and expansion. In this case, Nike has a higher
risk of defaulting, whereas Under Armour has more room to embrace responsibility and
invest in its expansion goals.
 Valuation Ratios- Nike's earnings distribution is critical, whereas Under Armour has
never returned revenue to its stockholders, opting instead to reward them with investment
recognition. The revenue distribution strategies of the 2 firms are comparable, as
evidenced by their revenue rates. Attributed to the reason that Under Armour does not
generate money, its revenue return is zero, but Nike has a potential revenue return.
Furthermore, the EPS displays how much money buyers earn by investing in the
company. According to the analysis, Nike's EPS is extremely promising, whilst Under
Armour’s EPS has been steadily improving over time. Under Armour's Price-Earnings
Ratio was unfavourable in 2018 as a result of the company's total shortfall (Boyle, Lewis-

Western and Seidel, 2021). Lower transaction growth due to shifting demand in sports
gear, fierce competition, and outlet closures by key suppliers compounded the loss. Yet,
the company made significant progress in 2019, as seen by a similar trajectory in the
company's Price-Earnings ratio. All of Under Armour’s other incentive ratios have
increased dramatically from 2018 to 2019, owing to the company's compensation
announcement shifting from a significant loss to a significant positive.
 Ratios of Liquidity- The most common ratios analysed are liquidity levels. It could be
obtained by dividing funds and liquid assets into short-term loans and present obligations.
Major enhancements in the company's excellence of goods and offerings may be
possible. The current and quick ratios of both companies are significantly higher than that
of the standard 1.0, indicating that they will have strong liquidity strength; nevertheless,
Nike outperforms Under Armour in terms of current ratio. In terms of revenue flow,
Under Armour has to strive more to improve its financial condition. This demonstrates
that Under Armour’s long-term share has been falling, whereas its fast-growing share has
already been increasing.
 Working Capital Ratios- Nike's working capital overall turnover is significantly greater
than that of Under Armour. Yet, trend analysis suggests that Nike is growing at a
significantly faster pace in terms of working capital turnover. Given this, Under
Armour’s management must adopt some links from Nike's strategy and concentrate on
improving their internal operational competence (Chen, Tan and Fang, 2018).
 Profitability Ratios- It was discovered that "The characteristics of financial precision are
linked to an understanding of initial output development in emerging businesses. This is
significant because one of the goals of fiscal reporting is to hold managers accountable to
finance supporters so that investment is allocated efficiently ". In 2018, Under Armour's
return on capital employed was adverse due to a negative gross pay, the company's
largest aggregate loss in ten years. Lower transaction growth due to shifting demand in
sports apparel, fierce competition, and outlet closures by large stores compounded the
disaster. In any event, the organisation made significant progress in 2019, as seen by a
trend in the firm's ROA. All of Under Armour's financial advantage ratios rose
significantly from 2018 to 2019, owing to the company's compensation rationale shifting

from a significant loss to a direct gain. Conversely, Nike has a strong track performance
in terms of output, as evidenced by the advantage ratios above.
Question 2: Balanced Scorecard
Whenever users create a process mapping correctly at the design stage, it shows how the
important goals in another multiple views, i.e. financial and customer, are directly and adversely
influenced by the authorized goals in the first two views. Users set your sights on the golden
Goal on the Strategic Roadmap for the phrase, and you organise initiatives to get the organisation
from which it is to where it wants to be, on a regular basis. In the following scenario, it's critical
that enterprise-level choices and strategies influence and influence multiple tiers of the
organisation (Commerford, Hatfield and Houston, 2018). This is accomplished by cascade the
process down to the lowest tiers, aided by the technique mapping. Each of those departments or
divisions would often use a comparable network mapping to determine which important
objectives apply to them individually. Regardless of the notion that just a few Tactical
Objectives on the Plan Mapping appear to be their direct responsibility, it is prudent for the
primary threshold underneath the Corporate Tier to analyse all Crucial Goal on the Policy Board.
This allows them to concentrate at the same level as the larger organisation. It also enables them
to allocate personal responsibility to employees within respective field of knowledge and
divisions in view of pre-determined goals. For me, such aims are becoming personal goals.
As a result, the institution's goal and purpose become a main focus for all tiers of the
organisation. Because it links to and provides understanding of the specific tasks of
administrative divisions, the balanced scorecard is an indispensable tool for higher-level
planning and implementation. Finally, individuals within the organisation take responsibility of
the objectives and outcomes that serve as a measure of implementation for the 2 components and
individuals. In the mid-1990s, Kaplan and Norton created the Balanced Scorecard approach to
assist businesses in setting out and analysing organisational results from both a financial and
non-financial perspective.
 Many levels of degraded organisations can aid area leaders and officials in identifying the
diverse items which must be able to enhance authoritative implementation. It will help in
increasing the accountability and actual results from a specific area.

 This is a viewpoint which aids in fully comprehending an organization's actions and goes
totally beyond the common belief that the organisation is self-contained and independent
(Csákné Filep and Karmazin, 2016).
 The concept could be quite beneficial to a firm because it focuses on the numerous
actions that must be carried out in order for them to work well. This would be the case
due to the cooperation or integration of various business-related activities. It will help in
improving the actual results of the company and actions that can be taken to improve the
decision of the business.
 This is useful for improving methodology because such frameworks could be translated
into implementation standards and goals. Frameworks helps in improving the
performance and future outcomes of the business.
The disadvantages of employing Kaplan and Norton's Balanced Scorecard are as follows:
 It would need a decent equilibrium between the 4 groups- financial, customer, interior,
and scholastic and expansion would be tough to complete. The equilibrium will help in
decision making and coordinating all the departments of the company.
 Despite all of the safeguards in place, executive management's primary focus may still be
on financial accomplishment. There may be some cases where management ignores the
interest of workforce and involves in the practices where there is a loss of workforce with
the action.
 It may have an excessive amount of processing references, making it difficult to operate.
Processing references increases the cost of the company and time required to operate the
activities of business.
In many commercial areas, the focus of businesses and their management is on immediate
manageability and financial rewards, and they frequently overlook long-term marketing tactics
and also the firm's motive and goal. To achieve better financial implementation and a bigger slice
of the bucket, a company should try to turn its objectives and strategies into specific industry
segments and customer targets. Often these organisations' belief that any customer who can pay
is a good customer was rejected by Kaplan and Norton as a short-sighted viewpoint, and they
instead emphasised that the organization's primary focus should be on what to do, as well as
what not to do, when using their receipt assessing structure (Ghesquiere, McAfee and Burnett,
2019). By utilising 4 main methods such as cash, customer, internal understanding, and growth,

the credit cards approach enables the organisation to have a larger and long run perspective than
following the most recent benefits.
Under Armour Balance Score Card-
 From a procedural or inner management standpoint- Under Armour’s sensible plan
of operation for productivity and reliability updates should stick to a normal basis. Every
quarter, the number of errors in productivity and sales would be reduced by 3%, and the
system would be evaluated annually for improvements. Under Armour would offer
additional element, such as machinery, and therefore would assess the phases on a case-
by-case situation for changes (Kovalenko, 2019).
 Education and Development- It is critical for Under Armour to maintain worker
attrition and maintenance costs minimal. In the athletic apparel sector, Under Armour’s
faith in increases in innovation is critical, and developments in mechanised technology
would continue to progress, putting the company on front of the industry. There would be
town hall-style talks about any advancements which require to be looked out thoroughly
throughout the organisation, and department leaders with collaborators would engage and
be prepared to face all such sorts of feedback.
 Shareholders Valuation or Monetary Viewpoint- In terms of earnings and expenses,
the company may need to increase earnings from potential customers by 10% over the
next 2 years. This would be accomplished by aggressively attracting additional clientele
via effective marketing and fresh clothes. All individuals would be held accountable for
providing excellent customer service. The firm's advantage is as important as the use of
gross income to achieve the achievement of the aims and ambitions, and the organisation
would magnify the commercial value and increase advantages by 5% on a regular basis.
 From the standpoint of client value- The company would continue to focus on
customer retention and attrition. User engagement is extremely important to the
company, and it plans to increase it by 5% annually for the next 3 years through
providing and collecting data from customer summaries. The divisional managers would
be in charge of collecting user surveys on a monthly basis, compiling statistics, and
reporting to senior management on the results (Lotfi, Salehi and Dashtbayaz, 2021). The
organisation would be supplied data and the customer would be provided a reward for

comparable durations based on the facts obtained in the evaluations, and the development
of customer value would be equated to customer devotion.
Question 3: Integrated Reporting
By instituting the consequence of both the corporations over a specific duration for
implementation, the connection Under Armour could follow the rules of the integrated report.
The dissolving covering specifies how organization monetary and non-monetary indicators are
presented in a unified statement (Paluri and Mehra, 2016). Those things, for instance, are offered
to provide compelling views to crucial facts like midsized corporate strategy, societal and
organisational constraints connections. Brief, moderate, and far range reporting are a minimum
reaction to the possible outcomes for the connection network, organisation, performance, and
possible outcomes. The IR technique could be beneficial for discussing processes, performance,
potential outcomes, and cells required for accomplishment when utilized in combination. If the
organisation adopts IR, it would be better fiscally sound, and it can offer it the similar treatment
to assist them in attracting more funding supporters.
As a consequence, built-in organisations must present monetary outcomes that are close to
non-performance. This information openness could be perceived as being skewed in the
circumstance based on its viewpoint as well as other downsides. Equally significantly, it is
extremely hazardous and time-consuming to make, gather, and establish data. Several areas are
difficult to comprehend. There's definitely an issue with the thoughts within the capturing
process. As this information spreads the fundamental component in the creation of benefits, the
connection with marketplace abilities is rigorously scrutinised. Its primitive form could cause
significant merger identification issues (Sonnenberg, 2018). Under Armour executives should
confront the initial spectrum in order to retrieve information for assessment preparation. Most
critical data could be shared to groups and accountancy systems. It is under-reporting all of the
great structures and procedures because it allows troubled businesses like Nike to reap the
benefits of it by providing quick and relevant information regarding almost any type of business.
Under Armour's ability to shift its company could be a challenge.
In relation to worker engagement, the concept of a shared statement is fiscal and budgetary
in a particular season. It also has the incredible ability to arrange non-monetary data. This allows
the aid to expand his or her appraisal and relevancy of the content. The strategy section of the
applicable study is, without a question, the well-organized study material. Throughout the period

invested demonstrating, the items are essential. This is critical for each important components
and associated measurement criteria for developing organised summaries. Considering that the
association is based on the supervisor's connection rather than the division, this is quantifiable.
This document is a broad response to advisers' real-world information requirements. Under
Armour's management division could receive the following benefits by implementing IR
fundamentals:
 Current disclosing only provides financial outcomes of financial information, however
integrating specifying provides information regarding relevant facts to enhance control.
 It assists in responding to the financial consistency essential for long-term value
building that the existing system cannot provide.
 Integrated detailing has recently emerged as a critical requirement for several worldwide
organisations.
 It also highlighted concise correlations by providing more facts and expertise than
previous releases (Tumataroa and O'Hare, 2019).
 It aids in the creation of considerable value from non-financial data such as licensed
technology, the capital sector, and natural resources.
 It provides a longer advantage or a broader area of data than current disclosures, allowing
for the creation and maintenance of value.
With all of it obtained in to consideration, the suggested strengths of integrated detailing
mitigated the price of supplying one more summary in Under Armour, as all of it from the
organisation of details to the investigation and comprehension of statistics will indeed add to the
load on disclosure, but the strengths of synchronised declaring might give the reward
establishment that might easily counterbalanced the expenditure of providing another summary.
As a consequence, Under Armour could use below criteria to create an integrated analysis in
order to enhance the efficiency of its company operational activities:
 Comprehensiveness: As being one of the essential principles, preciseness implies that
the merged statement must be brief and straightforward. There must be enough data for
the client to consider the importance in the specifics of the organisational process,
approach, and goals, among other things. Simultaneously, there must be sufficient data
sans unnecessary complexities. Because reaching simplicity must not come at the

expense of other governing concepts and demonstrations, it is critical that the affiliate
adopts a credible approach to its arranged statement.
 Reliability: A merged study's stability essential concept relates with the data which is
free of obstacles. A combination of regulatory systems, the existence of external and
inner evaluations, and diverse procedures could all aid in ensuring the accuracy of data.
The processes, method, and process involved of delivering the aggregated statement are
all the responsibility of an organisation's administrative framework.
 Materiality: It is likely the basis of every particular core idea. It implies that the data
connected with a unified analysis provides useful data about the operational activities and
the revenue generation activity over time. It is a link, not a fixed norm. As a result,
associations must carefully identify substantive concerns in order to create an organised
analysis (Zimon and Zimon, 2019). Furthermore, it must be noted that the technical data
provided in the proposed study does not have to be 100% accurate. There must be
transparency about the dual vulnerabilities, possible entrances, and favourable and
unfavourable instances subsequently on in the organisational viewpoint.
 Emerging Approach: As a core concept, prospective program incorporates both the
significance of forward-looking data and investigations into the period range across that
the operational basic necessities are established. Aside from thinking on the prospective
and the revenue development procedure in the brief, intermediate, and longer term, it's
critical to establish connections among previous actions and the operational prospective
potential.
CONCLUSION
From the report prepared it can be asserted that the company must understand the use and
need of financial accounts being prepared by a business and how it would serve as a tool in
ascertaining the results and outcomes. It further counts the usefulness of ratios, development of
such statements and records which would serve the purpose in right manner (Zimon and Zimon,
2019). It explains how accounting and financing would serve as a technique in finding where the
business is lacking and lagging behind in rendering the desired results as well as services. It also
defines how the accounts can be used a key for attracting customers from marketplaces and
serving the competition in right manner.

REFERENCES
Books and journals
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Alziyadat, N. and Ahmed, H., 2019. Ethical decision‐making in Islamic financial institutions in
light of Maqasid Al‐Sharia: A conceptual framework. Thunderbird international
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Aureli, S., Magnaghi, E. and Salvatori, F., 2019. The role of existing regulation and discretion in
harmonising non-financial disclosure. Accounting in Europe. 16(3). pp.290-312.
Boyle, E.S., Lewis-Western, M.F. and Seidel, T.A., 2021. Do Quarterly and Annual Financial
Statements Reflect Similar Financial Statement Error in the Post-SOX Era?. Journal of
Financial Reporting, 6(1), pp.1-31.
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financial product management. In 2018 28th International Telecommunication
Networks and Applications Conference (ITNAC) (pp. 1-3). IEEE.
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management on auditor scrutiny of management's other financial reporting decisions.
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The Gerontologist, 59(2), pp.e109-e129.
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financial and economic security of business entities. Вісник Черкаського
національного університету імені Богдана Хмельницького. Серія Економічні
науки, (3), pp.70-77.
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Sonnenberg, S. J., 2018. 22 The Economic Psychology of Financial Decision-Making and
Money Management in the Household. CENTRE FOR DECISION RESEARCH,
UNIVERSITY OF LEEDS, UK, p.354.
Tumataroa, S. and O'Hare, D., 2019. Improving self-control through financial counseling: A
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pp.304-312.
Zimon, D. and Zimon, G., 2019. The impact of implementation of standardized quality
management systems on management of liabilities in group purchasing
organizations. Quality Innovation Prosperity, 23(1), pp.60-73.

APPENDIX
Financial Statements
Under Armour
Nike