Financial Statement Analysis

Running head: REPORT 0
FINANCIAL STATEMENT ANALYSIS
MAY 2, 2019
STUDENT DETAILS:

REPORT 1
Introduction
The financial Analysis is very important tool. It is so helpful in examining the performance of
corporation on a basis of assessment of the income statement, balance sheet and assessment
through the ratio analysis. A major objective of financial analysis is to know whether a
corporation is constant or not, and whether a corporation is solvent or not. The company will
also be able to know that what is the liquidity position and profitability position of company
(Arkan 13-26). The corporation may easily take the investment related decisions. In this
report, profitability position and solvency position of Nike and UnderArmour is examined.
Ratio analysis
Profitability ratios
Profitability ratio of a corporation refers to the ratios, which determine ability of company to
generate incomes as compared to expenditures during the specific period. Gross processing
ratio and return on equity ratio are significant ratios to assess the profitability of companies.
Return on Equity
The return on equity (ROE) ratio states that how much profit the corporation may earn from
the money (Sulkava 197-206). This ratio is very useful for the management because it
assesses the capability of the corporation to make profits from the stakeholder’s investments
in the corporation. The higher return on equity ratio signifies a higher profitability. The return
on equity ratio of Nike is 34% in 2017 and it is slightly reduced to 20% in 2018. On the other
hand, this ratio of UnderArmour is -2% in both the year. In this way, both the company is not
doing well. But it is better to invest in Nike.

REPORT 2
Ratios Formula Nike UnderArmour
2017
20
18 2017
20
18
Profitability
Return on Equity Net income 34%
20
% -2% -2%
Shareholder's
equity
Gross Processing Ratio
Gross processing ratio means the profitability ratio that shows a relationship between net
revenue and gross profit. Gross processing ratio is important for an organization because
gross processing ratio is very helpful in assessing the operational performances of
corporation. The higher gross processing ratio is an ideal gross processing ratio. Gross
processing ratio of Nike is 45% in 2017 and it is slightly reduced to 44% in 2018. On the
other hand, this ratio of UnderArmour is 45% in both the year. In this way, both the company
is doing well however profitability position of UnderArmour is better than Nike with 1%
difference.