Situational Analysis For Gap Inc

1932 WordsNov 1, 20168 Pages
Situational Analysis for Gap Inc. To get a better idea of how Gap Inc. is doing overall a variance analysis must be done. In addition various financial ratios must also be calculated. For the variance analysis the fiscal years of 2013 and 2015 are being examined and compared. The financial ratios that will be looked at are: working capital, current ratio, quick ratio, debt to equity ratio, debt to total assets ratio, inventory turnover, capital assets turnover, total assets turnover, return on total assets and return on equity. The return on equity, debt to equity and Variance Analysis The first item to be compared is the revenues for the fiscal years. The revenue for the fiscal year of 2013 is $15,651,000,000, while the revenue for the fiscal year of 2015 is $15,797,000,000. Therefore in 2015 Gap Inc. had $146,000,000 or 9.24% more revenue than in 2013. Though they made more sales in 2015, due to other factors Gap Inc. ends up with less profit after tax (also known as return on revenue) in 2015, than they do in 2013. One of these factors is the cost of goods (COG) sold. Though the cost of goods sold only increases slightly from 2013 to 2015 it would have an effect on the profit, as Gap Inc. would end up with less of a profit because they had to pay more to produce and sell their products. In addition their operating expenses have also risen from $4,144,000 in 2013 to $4,196,000,000 in 2015. The rise in cost for operating expenses would also effect the return on
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