Companies need to be analyzed: 1. Under Armour 2. Hanesbrand Analyze above 2 companies in this project. Find and use annual reports for both companies along with any other sources you believe would be relevant to this project. After completing your analysis of both companies, recommend which 1 of these 2 companies is the stronger company going forward and therefore the one an investor should invest in and provide your rationale for this recommendation. It should be based on your analysis of the company’s financial statements and other sources (assume the investor only wants to invest in 1 of the 2 companies being analyzed) so you need to determine and explain which of the 2 companies would be the superior investment. Refer to and use all of the following from both companies’ annual reports and/or 10-K filings to include: • Each company’s financial statements (Income statement, Balance sheet, Cash flow, Stockholders’ Equity). • The identified risks addressed in the annual reports. • The Management Discussion & Analysis (MD&A) section. • The notes to the financial statements addressed in the annual reports. • Balance sheet with particular focus on Goodwill/Intangible Assets. • External auditor’s assessment re. the quality of the company’s financial accounting/reporting. • Any other sections of the annual report that you believe are relevant to your analysis. You must extract all financial information regarding the companies you analyze from their annual reports and calculate the relevant ratios independently. Do not base these ratios on how someone else has calculated them. Some key elements (but not an all-inclusive list) to this analysis follow: 1) For both companies, compare, contrast, and evaluate the following over a minimum of at least the past 5 years: a. ROI performance b. Liquidity c. Critical working capital/PP&E turnover efficiency d. Overall Balance sheet efficiency e. Market perception/valuation of the companies f. Dividend payout comparison g. Debt ratios h. Cash flow performance (Operating, Investing, Financing, & Free Cash Flow) i. Cash Conversion Cycle j. Profitability performance/efficiency k. Goodwill l. Common size and/or horizontal analysis for each company addressing key elements within the company’s: i. Income statement ii. Balance sheet Provide a separate schedule showing the basis for each of these calculations. Regarding the ratios addressed above, refer to the Module 3 slides posted into Blackboard as you work on this project. 2) The critical challenge you will face in this project is how to interpret and apply ratios and whatever other data you believe is relevant to attempt to project future performance by the company(s) being evaluated (and therefore determine which company might be a good vs. poor investment). Keep in mind…past performance is already priced in the stock. If you are making an investment recommendation, it is because you think the company will continue to grow in the future and therefore experience stock price growth in the coming years. Accordingly, I do not want your analysis to simply regurgitate a series of numbers and ratios (and their definitions). Instead, I want to know what you deem to be most relevant (and why) which enabled you to make its recommendation. Keep in mind calculating ratios based on an analysis of a company’s financial statements provides additional visibility into the efficiency of a company. Explain whether the ratio results and multi-year ratio trends are positive or negative for each item. 3) Make sure you address your assigned companies’ cash flow statements/performance. Understanding cash flow performance based on an analysis of the cash flow statement is absolutely critical and is a very important area to focus on. “Cash is King” is a common mantra within many companies and is a valid saying – cash flow is the lifeblood of any company so it is very important to understand if the company can sustainably generate positive free cash flow as well as understanding the sources and uses of cash. 4) You should ensure you look at the external audit report write-up included in a company’s annual report to ensure there are no concerns or material deficiencies noted by the company’s auditors. Make sure you understand what a “material deficiency” means in accounting parlance. If any are identified, this should definitely be a concern for investors. 5) Highlight which ratios calculated by your team and other information you collected were most influential in developing your recommendation and explain why you view these as important to your analysis. What items do you specifically like and which items do you not like (perhaps causing some concern as you analyze the company)…and why? (Spend time on this portion of the analysis – this will highlight your comprehension of what the ratios are indicating and will allow you to explain why they are important). General Information: Let me repeat what my expectations of the end product will be. Approach the project seriously and make this a high-quality, executive leadership-quality, well thought-out and researched analysis. Deliverables expected in this project are the following: 1. Brief email update during the project progress addressing the current status of your analysis, how work will be done, and what questions/issues you have encountered to date. 2. Written analysis should be in Microsoft Word format. Note that the document will be validated for originality using SafeAssign after you upload. 3. Include in your analysis schedule(s) showing the basis for each of the calculations identified in section 1 above. For ratio calculations, identify the numerator and denominator used to calculate the ratio in the anal back-up. A description of the numerator and denominator accounts used as well as the applicable values from the company’s financial statements by year analyzed must be included in this analysis. 4. Brief video conference meeting for you to walk me through the highlights of your analysis, its conclusion, and the rationale for your team’s recommendation using Zoom. This virtual meeting/discussion will scheduled once your are done with the project. I did attach all the Annual Reports of Under Armour and Hanes brand. Also please gather 10-k filings reports for the both companies. Under Armour: https://about.underarmour.com/investor-relations/financials/annual-reports Hanes brand: https://ir.hanesbrands.com/financial-information/annual-reports