Gap, Inc. Financial Analysis

2895 words 12 pages
The GAP, Inc.
The Fiscal year Ended January 28, 2012

A. INTRODUCTION AND OVERVIEW 1. Financial Statements Included in the Annual Report

2.1. Consolidated Statements of Cash Flow 2. Major Competitors of the GAP, Inc.
American Eagle Outfitters, Inc., J. Crew Group, Inc., and the TJX Companies, Inc. can be shown as the major competitors for the GAP, Inc. Based on the data given in annual reports of the companies, gross margin % for GAP, Inc. is 36%, while American Eagle Outfitters has 36%, J. Grew Group, Inc. has 40%, and TJX has 32% gross margin. Stock price on November 2, 2012 is $35.11 for the GAP, Inc., while it is $21.05 for American Eagle Outfitters, Inc., $43.55 for J. Crew Group, Inc., and $41.52 for the TJX
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Proceeds from issuance of long-term debt are $1.646 billion for fiscal year 2011 and net cash used for financing activities is $602 million.

9. Ratio Analysis for the Company
The current ratio is the one of the measures of company equity and it indicates the relationship between current assets and current liabilities. For the company, current ratio is calculated as below:

The return on sales ratio measures the company’s profitability and it indicates the relationship between net income and sales. For the company, return on sales ratio is shown below:

The debt-to-equity ratio is a measure of the company’s solvency and it measures the relative proportions of financing from debt and financing from shareholders. It is calculated for the company as seen below:

The return on investment ratio shows the return generated per dollar of total investment and it is calculated for the company as seen below:

The return on owner’s equity ratio measures the return generated per dollar of owner’s equity and for the company the return on owner’s equity ratio is:

The gross margin ratio measures the gross profit of the company’s products and for the company it is calculated as shown below:

The inventory turnover measures the speed at which company sells its inventory. This measure is important to ensure that inventory delivered customers in a timely manner so that cash can be


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