Gap Inc Financial Statement Analysis LR

1493 WordsDec 18, 20146 Pages
Financial Statement Analysis for Gap Inc. Company Background Gap Inc. is a leading global apparel retail company offering apparel, accessories, and personal care products for men, women, and children under the Gap, Banana Republic, Old Navy, Piperlime, Athleta, and Intermix brands. Having distinct brands across multiple channels and countries allows Gap Inc. a strong competitive advantage. The company currently has 375 stores in 41 countries. Products are also online through Company-owned websites. Merchandise is purchased from more than 1,000 vendors having factories in approximately 40 countries. No vendor accounted for more than 5 percent of total purchases in 2013 and approximately 98 percent of purchases are from outside the United…show more content…
The next set of ratios evaluate solvency, which is the company’s ability to meet its long-term obligations. The first ratio, times interest earned, represents a margin of protections for creditors. Gap Inc. generated $35.23 in income for each $1 of interest expense, which increased quite substantially from 2011 and 2012. The next ratio to evaluate for Gap Inc. is the debt-to-equity ratio, which decreased from 1.69 in 2011 to 1.56 in 2013. This tells us that Gap Inc. has $1.69 in liabilities for every $1 in stockholders’ equity. Gap Inc. v. J. Crew Group One of Gap Inc.’s biggest competitors is J. Crew Group because they have similar branding strategies and product offerings. J. Crew Group is an internationally recognized brand that offers apparel and accessories and differentiates itself through high standards of quality, style, design, and fabrics. The company operates stores and websites both domestically and internationally, and designs, sells, and markets products under the J. Crew, Crewcuts, and Madewell brands. Their customer base includes people who are affluent, college-educated, professional, and fashion conscious. They operate a total of 451 stores located in the United States, Canada, and the United Kingdom. By comparing the profitability of the two major international retailers, we see that J. Crew Group has a lower return on assets at an average of 5% for 2011-2013 compared to Gap Inc., which has an average ROA of 16% for
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