The Gap, Inc. (GAP)

Short-term

Turnover ratios

The activity ratios for The Gap, Inc. provide valuable insights into the efficiency of the company's operations.

1. Inventory Turnover:
- The inventory turnover ratio reflects how many times inventory is sold and replaced over a specific period. The trend for The Gap, Inc. shows an improvement from 3.71 in January 30, 2021, to 4.29 in January 28, 2023, indicating that the company is managing its inventory more efficiently.

2. Receivables Turnover:
- The receivables turnover ratio measures how efficiently a company collects its outstanding receivables. The data indicates an increasing trend from 38.02 in January 30, 2021, to 50.12 in February 1, 2025, demonstrating that The Gap, Inc. is collecting its receivables at a faster pace over time.

3. Payables Turnover:
- The payables turnover ratio assesses how quickly a company pays its suppliers. The fluctuations in this ratio for The Gap, Inc. suggest variations in the company's payment terms with its suppliers over the years.

4. Working Capital Turnover:
- The working capital turnover ratio measures how efficiently a company utilizes its working capital to generate sales revenue. The fluctuating trend in this ratio for The Gap, Inc. implies varying levels of working capital effectiveness in supporting the company's sales activities.

Overall, analyzing these activity ratios can help assess The Gap, Inc.'s operational efficiency, effectiveness in managing inventory, collection of receivables, payment to suppliers, and utilization of working capital in generating sales.

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Average number of days

The Gap, Inc.'s activity ratios provide valuable insights into how efficiently the company manages its inventory, collects its receivables, and pays its payables.

1. Days of Inventory on Hand (DOH):
- The trend in DOH over the years shows a fluctuation in inventory management efficiency. The company had a high DOH of 109.79 days on January 29, 2022, which decreased to 79.90 days on February 3, 2024. This indicates that the company improved its inventory turnover by holding inventory for fewer days before selling it.

2. Days of Sales Outstanding (DSO):
- The DSO metric reflects how quickly the company collects payments from its customers. A lower DSO is generally favorable as it indicates prompt collection of receivables. The Gap, Inc. reduced its DSO from 9.60 days on January 30, 2021, to 7.28 days on February 1, 2025, showing improved efficiency in collecting payments from customers.

3. Number of Days of Payables:
- The number of days of payables measures how long it takes for the company to pay its suppliers. The Gap, Inc. managed its payables more efficiently over the years, with the number of days decreasing from 69.95 days on January 30, 2021, to 61.31 days on February 1, 2025. This suggests that the company is taking longer to pay its suppliers, potentially benefiting from extended payment terms.

Overall, The Gap, Inc. demonstrated improvements in inventory management, receivables collection, and payable terms over the years, indicating a more efficient use of resources and cash flow management.

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Long-term

The Gap, Inc.'s long-term activity ratios show an improvement in the efficient utilization of its fixed assets over the years. The fixed asset turnover ratio has notably increased from 4.86 in January 30, 2021, to 6.04 in February 1, 2025. This trend indicates that the company is generating more revenue for each dollar invested in fixed assets, highlighting better operational efficiency and potentially improved asset utilization.

In contrast, the total asset turnover ratio reflects a slight fluctuation over the same period. While there was an increase from 1.00 in January 30, 2021, to 1.37 in January 28, 2023, the ratio then decreased to 1.27 by February 1, 2025. This suggests that although the company is generating more sales relative to its total assets initially, there has been a slight decrease in overall sales efficiency in recent years.

Overall, The Gap, Inc.'s long-term activity ratios indicate a positive trend in fixed asset turnover efficiency. However, there may be a need to further analyze the fluctuations in total asset turnover to ensure effective utilization of all assets to generate revenue.