How to Calculate Under Armour’s Gross Profit Ratio for 2015
Use this premium calculator to compute Under Armour’s 2015 gross profit ratio from revenue and cost of goods sold. The standard formula is gross profit ratio = (net revenue – cost of goods sold) / net revenue x 100.
Expert Guide: How to Calculate Under Armour’s Gross Profit Ratio for 2015
If you want to understand how efficiently Under Armour turned product sales into gross profit in 2015, the gross profit ratio is one of the clearest measures to use. It takes two income statement numbers, net revenue and cost of goods sold, and converts them into a percentage that shows how much of every sales dollar remained after covering direct product costs. For Under Armour in 2015, this is especially useful because the company was still in a strong expansion phase, so analysts often examined whether growth was being supported by healthy product economics.
The calculation itself is simple, but using the correct financial statement figures matters. Under Armour’s 2015 annual report reports net revenues of $3,963,313 thousand and cost of goods sold of $2,026,157 thousand. Subtracting cost of goods sold from net revenues gives gross profit of $1,937,156 thousand. Then divide gross profit by net revenues and multiply by 100:
2015 Under Armour calculation = ((3,963,313 – 2,026,157) / 3,963,313) x 100 = 48.9%
That means Under Armour kept roughly 48.9 cents of gross profit for every dollar of sales in 2015 before deducting operating expenses such as selling, marketing, administration, and other overhead items. This ratio is often also discussed as gross margin percentage. In practice, many analysts use the terms almost interchangeably, although some finance instructors prefer the wording gross profit ratio when teaching ratio analysis.
Why the gross profit ratio matters
The gross profit ratio tells you more than simple profitability. It helps reveal product pricing power, sourcing efficiency, manufacturing cost discipline, and the effect of sales mix. A higher ratio generally means the business retains more sales revenue after direct product costs. A declining ratio may suggest rising input costs, increased discounting, supply chain pressure, or a less favorable product mix.
For a brand like Under Armour, this measure is particularly important because the company sells apparel, footwear, and accessories in highly competitive categories. Gross profit ratio can indicate whether the brand is maintaining premium pricing and controlling inventory and production costs while it grows. In fast-growing consumer brands, revenue growth by itself can look impressive, but if cost of goods sold rises too quickly, the quality of that growth may weaken. That is why investors and students often calculate both revenue growth and gross profit ratio together.
Step by step calculation for Under Armour 2015
- Find net revenue. Under Armour reported net revenues of 3,963,313, stated in thousands of dollars.
- Find cost of goods sold. The company reported cost of goods sold of 2,026,157, also in thousands.
- Compute gross profit. 3,963,313 minus 2,026,157 equals 1,937,156.
- Divide gross profit by net revenue. 1,937,156 divided by 3,963,313 equals approximately 0.4888.
- Convert to a percentage. 0.4888 x 100 equals approximately 48.9%.
As long as all numbers are in the same unit, whether dollars, thousands, or millions, the ratio will be the same. This is why the calculator above lets you change units without changing the final percentage logic. If you enter values in thousands, keep both net revenue and cost of goods sold in thousands. If you convert to millions, convert both figures consistently.
Under Armour 2015 gross profit ratio calculation table
| Item | 2015 Amount | How Used in the Formula |
|---|---|---|
| Net revenue | $3,963,313 thousand | Top line sales base for the ratio |
| Cost of goods sold | $2,026,157 thousand | Direct product cost deducted from net revenue |
| Gross profit | $1,937,156 thousand | Calculated as net revenue minus cost of goods sold |
| Gross profit ratio | 48.9% | Gross profit divided by net revenue |
How to interpret the 48.9% result
A 48.9% gross profit ratio means Under Armour retained nearly half of its sales as gross profit before operating expenses. That is a strong gross profit level for a branded athletic company, especially one focused on premium performance positioning. However, the ratio should not be mistaken for net profit margin. Net profit margin comes much later on the income statement after selling, general and administrative expenses, taxes, and other items are included.
This distinction matters because a company can have a solid gross profit ratio and still report lower operating or net margins if it is investing heavily in marketing, e-commerce, retail expansion, product innovation, or international growth. That was relevant for Under Armour during this period because the business was expanding rapidly and carrying substantial growth-related costs.
Comparing 2015 with nearby years
One of the best ways to make ratio analysis meaningful is to compare the same company across multiple periods. Looking at Under Armour before and after 2015 helps you see whether the 2015 figure was stable, improving, or under pressure. The table below uses annual report figures in thousands of dollars and calculates the gross profit ratio for 2014 through 2016.
| Year | Net Revenue | Cost of Goods Sold | Gross Profit | Gross Profit Ratio |
|---|---|---|---|---|
| 2014 | $3,084,370 | $1,572,271 | $1,512,099 | 49.0% |
| 2015 | $3,963,313 | $2,026,157 | $1,937,156 | 48.9% |
| 2016 | $4,831,959 | $2,573,130 | $2,258,829 | 46.7% |
This comparison shows that 2015 was very close to 2014 on gross profit ratio, with only a slight change, while 2016 was materially lower. That tells you 2015 was still a year of relatively healthy gross profitability, even as the company was scaling. A student analyzing these numbers might conclude that product economics remained robust in 2015, but subsequent margin compression in 2016 deserves deeper investigation.
What counts as cost of goods sold
To calculate gross profit ratio correctly, you need to use the proper cost figure. Cost of goods sold usually includes direct product costs such as raw materials, manufacturing, production labor, freight-in, and certain inventory-related charges. It does not include broader operating expenses like marketing campaigns, executive salaries, head office costs, or income taxes. Those appear lower on the income statement.
This distinction is important because beginners sometimes subtract too many expenses and accidentally compute operating margin instead of gross profit ratio. For Under Armour’s 2015 ratio, use only net revenues and cost of goods sold from the gross profit section of the income statement. Do not subtract selling, general, and administrative expenses in this calculation.
Common mistakes to avoid
- Using gross profit instead of revenue as the denominator. The denominator should be net revenue, not cost of goods sold and not total assets.
- Mixing units. If revenue is entered in thousands and cost of goods sold in millions, the result will be wrong.
- Using operating expenses. Gross profit ratio only uses direct product costs.
- Forgetting to multiply by 100. A decimal like 0.4888 should be expressed as 48.9%.
- Relying on rounded figures too early. Use full amounts first, then round at the end.
How analysts use this ratio in practice
Professional analysts rarely look at gross profit ratio in isolation. Instead, they combine it with revenue growth, inventory turnover, operating margin, and return measures. For example, if gross profit ratio is stable while revenue is growing quickly, that can suggest the company is scaling without sacrificing product economics. If the ratio falls sharply while inventories rise, an analyst may suspect markdown risk, input cost pressure, or channel weakness.
For Under Armour in 2015, a nearly 49% gross profit ratio, paired with strong revenue growth, could be interpreted as evidence of substantial brand strength. The company was not just selling more products, it was still retaining a large share of each sales dollar after direct costs. That does not automatically guarantee long-term profitability, but it is an encouraging sign when assessing the business model during that period.
Relationship between gross profit ratio and gross margin
In many classrooms, textbooks, and analyst notes, gross profit ratio and gross margin percentage mean the same thing. Both are usually calculated as gross profit divided by net sales or net revenue. If you read a report saying Under Armour had a gross margin of roughly 48.9% in 2015, that is generally consistent with the gross profit ratio calculated here.
The terminology difference matters less than the formula. What matters is that you verify the numerator is gross profit and the denominator is net revenue. Once you confirm that, you can compare the ratio across years and against peers with confidence.
Additional 2015 income statement context
The ratio becomes more informative when placed within the broader income statement. Under Armour generated strong gross profit in 2015, but management still had to absorb substantial operating expenses to support growth. The table below helps show where gross profit sits in the financial performance chain.
| 2015 Income Statement Item | Amount in Thousands | Why It Matters |
|---|---|---|
| Net revenue | $3,963,313 | Starting point for the ratio |
| Cost of goods sold | $2,026,157 | Direct product cost base |
| Gross profit | $1,937,156 | Amount left after direct costs |
| Selling, general and administrative expenses | $1,461,583 | Operating costs that are not part of gross profit ratio |
| Income from operations | $405,744 | Shows how much profit remained after operating expenses |
This context shows why gross profit ratio is useful but incomplete. Under Armour generated almost $1.94 billion of gross profit in 2015, yet that gross profit still had to fund marketing, administration, infrastructure, innovation, and distribution expansion. So the ratio is best viewed as a measure of product-level economics, not final profitability.
Formula walkthrough using simplified numbers
If you want to understand the logic intuitively, imagine a company sells $100 of merchandise and pays $51 in direct product costs. Gross profit is $49, and the gross profit ratio is $49 divided by $100, which equals 49%. Under Armour’s 2015 result works the same way, only with much larger reported figures. The ratio tells you what share of sales remains after direct costs.
Where to verify the numbers
You should always verify public company figures against primary filings. For Under Armour, the most authoritative source is the SEC filing for the company’s 2015 Form 10-K. If you want to strengthen your understanding of gross margin and financial statement analysis, academic and business school resources can also help explain the concept and how it differs from operating margin and net margin.
- U.S. Securities and Exchange Commission: Under Armour 2015 Form 10-K
- SEC EDGAR company filings for Under Armour
- Harvard Business School Online: Gross Margin vs. Profit Margin
Final takeaway
To calculate Under Armour’s gross profit ratio for 2015, subtract cost of goods sold from net revenue, then divide the result by net revenue and convert to a percentage. Using the company’s reported 2015 figures, the answer is approximately 48.9%. That indicates Under Armour retained close to half of each sales dollar after covering direct product costs, a sign of solid gross profitability during that year.
If you are studying for an accounting exam, writing an equity research note, or building a financial model, this ratio is a foundational starting point. It is simple, meaningful, and easy to compare across time. Just remember that gross profit ratio measures product-level profitability, not full company profitability. For a complete view, pair it with operating margin, net income, cash flow, and inventory trends.