The Gap Inc. (GPS) operates specialty retail stores under such brand names as GAP, Old Navy, and Banana Republic. The following asset and liability data (in millions) were adapted from recent financial statements. Year 2 Year 1 Current assets: Cash $1,515 $1,510 Accounts receivable 275 462 Inventory 1,889 1,928 Prepaid and other current assets 638 530 Total current assets $4,317 $4,430 Total current liabilities $2,234 $2,342 1. Compute quick assets for Years 2 and 1.2. Compute the quick ratio for Years 2 and 1.3. The Gap’s quick assets have _______ from Year 1 to Year2. Its quick ratio ______ from fill ______ in Year 1 to ______ in Year 2. Overall, The Gap’s liquidity position has _______ from Year 1 to Year 2.

Ratio analysis means where different ratio of various years of years companies has been compared and…

Answered: The Gap Inc. (GPS) operates specialty…

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter5: Inventories And Cost Of Goods Sold

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The Gap Inc. (GPS) operates specialty retail stores under such brand names as GAP, Old Navy, and Banana Republic. The following asset and liability data (in millions) were adapted from recent financial statements.

	Year 2	Year 1
Current assets:
Cash	$1,515	$1,510
Accounts receivable	275	462
Inventory	1,889	1,928
Prepaid and other current assets	638	530
Total current assets	$4,317	$4,430
Total current liabilities	$2,234	$2,342

1. Compute quick assets for Years 2 and 1.

2. Compute the quick ratio for Years 2 and 1.

3. The Gap’s quick assets have _______ from Year 1 to Year

2. Its quick ratio ______ from fill ______ in Year 1 to ______ in Year 2. Overall, The Gap’s liquidity position has _______ from Year 1 to Year 2.

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