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Financial Reporting Case: What Is It Worth?: Property of STI
Financial Reporting Case: What Is It Worth?: Property of STI
“I can’t believe it. Why don’t you accountants prepare relevant financial statements?” Your friend Shayne is a
finance major and is constantly badgering you about what she perceives to be a lack of relevance of financial
statements prepared according to generally accepted accounting principles (GAAP). “For example, take a look
at this statement of financial position for Under Armour (see figures below) that I just downloaded from the
Internet. The equity (or book value) of the company, according to the 2X15 statement of financial position,
was nearly $1.7 billion. But if you multiply the number of outstanding shares by the stock price per share at
the same point in time, the company’s market value was about $9 billion. I thought equity was supposed to
represent the value of the company, but those numbers are not close.” You decide to look at the company’s
balance sheet and try to set Shayne straight.
Stockholders’ equity
Additional paid-in capital 636,630,000
Retained earnings 1,076,533,000
Accumulated other comprehensive loss (45,013,000)
Total stockholders’ equity 1,668,222,000
Total liabilities and stockholders’ equity $ 2,868,900,000
2. The usefulness of the balance sheet is enhanced by classifying assets and liabilities according to common
characteristics. What are the classifications used in Under Armour’s statement of financial position, and
what do those categories include?