The Gap, Inc. (GAP)
Activity ratios
Short-term
Turnover ratios
| Feb 1, 2025 | Nov 2, 2024 | Aug 3, 2024 | May 4, 2024 | Feb 3, 2024 | Oct 28, 2023 | Jul 29, 2023 | Apr 29, 2023 | Jan 28, 2023 | Oct 29, 2022 | Jul 30, 2022 | Apr 30, 2022 | Jan 29, 2022 | Oct 30, 2021 | Jul 31, 2021 | May 1, 2021 | Jan 30, 2021 | Oct 31, 2020 | Aug 1, 2020 | May 2, 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Inventory turnover | 4.29 | 3.84 | 4.25 | 4.63 | 4.57 | 3.92 | 4.32 | 4.32 | 4.29 | 3.43 | 3.25 | 3.17 | 3.32 | 3.60 | 4.33 | 4.06 | 3.71 | 3.40 | 4.19 | 4.39 |
| Receivables turnover | 50.12 | — | — | — | 51.52 | — | — | — | 45.93 | — | — | — | 41.78 | — | — | — | 38.02 | — | — | — |
| Payables turnover | 5.95 | 5.88 | 5.89 | 7.56 | 6.76 | 6.49 | 6.85 | 8.29 | 7.77 | 7.52 | 6.21 | 6.29 | 5.14 | 6.00 | 6.24 | 6.29 | 5.22 | 4.09 | 5.77 | 10.02 |
| Working capital turnover | 7.75 | 8.44 | 9.57 | 10.78 | 11.46 | 12.01 | 12.26 | 11.29 | 11.47 | 9.59 | 11.84 | 10.54 | 15.32 | 11.97 | 6.54 | 6.63 | 6.50 | 7.28 | 8.33 | 18.83 |
The activity ratios of The Gap, Inc. provide insights into the efficiency of the company's operations over time.
1. Inventory Turnover:
The inventory turnover ratio measures how many times a company's inventory is sold and replaced during a specific period. The trend for The Gap shows a slight decline in inventory turnover from May 2020 to February 2025, indicating that the company is taking longer to sell its inventory.
2. Receivables Turnover:
The receivables turnover ratio reflects how many times a company collects its accounts receivable during a period. The Gap had sporadic data for this ratio, which implies that the company may not have consistent accounts receivable collection practices.
3. Payables Turnover:
The payables turnover ratio measures how quickly a company pays its suppliers. The data for The Gap shows fluctuations in payables turnover, indicating variations in the company's payment terms with its suppliers over the years.
4. Working Capital Turnover:
The working capital turnover ratio demonstrates how efficiently a company is utilizing its working capital to generate sales. The Gap's working capital turnover fluctuated over time, but generally remained at moderate levels, suggesting stable utilization of working capital to support revenue generation.
Overall, while The Gap's activity ratios showed some variability, it is essential for the company to monitor and potentially optimize its inventory management, receivables collection, payables payment, and working capital efficiency to enhance operational performance and profitability.
Average number of days
| Feb 1, 2025 | Nov 2, 2024 | Aug 3, 2024 | May 4, 2024 | Feb 3, 2024 | Oct 28, 2023 | Jul 29, 2023 | Apr 29, 2023 | Jan 28, 2023 | Oct 29, 2022 | Jul 30, 2022 | Apr 30, 2022 | Jan 29, 2022 | Oct 30, 2021 | Jul 31, 2021 | May 1, 2021 | Jan 30, 2021 | Oct 31, 2020 | Aug 1, 2020 | May 2, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 85.16 | 95.08 | 85.78 | 78.79 | 79.90 | 93.22 | 84.41 | 84.44 | 85.01 | 106.39 | 112.27 | 115.06 | 109.79 | 101.48 | 84.28 | 89.95 | 98.36 | 107.36 | 87.02 | 83.19 |
| Days of sales outstanding (DSO) | days | 7.28 | — | — | — | 7.08 | — | — | — | 7.95 | — | — | — | 8.74 | — | — | — | 9.60 | — | — | — |
| Number of days of payables | days | 61.31 | 62.13 | 61.97 | 48.27 | 54.03 | 56.20 | 53.31 | 44.04 | 46.97 | 48.53 | 58.73 | 58.06 | 70.98 | 60.79 | 58.49 | 58.07 | 69.95 | 89.27 | 63.23 | 36.44 |
The activity ratios of The Gap, Inc. provide insight into its efficiency in managing its inventories, receivables, and payables.
1. Days of Inventory on Hand (DOH): The average number of days it takes for The Gap to sell its inventory increased from 83.19 days in May 2020 to 115.06 days in April 2022 before decreasing to 85.16 days in February 2025. This indicates fluctuations in inventory turnover over the period, with a significant peak in April 2022.
2. Days of Sales Outstanding (DSO): The number of days it takes for The Gap to collect its receivables varied over time. DSO was 9.60 days in January 2021, decreased to 7.95 days in January 2023, and then increased slightly to 7.28 days in February 2025. The Gap appears to have a relatively efficient collection process for its receivables.
3. Number of Days of Payables: The Gap's payment period to its suppliers ranged from 36.44 days in May 2020 to 62.13 days in November 2024. The gap between payables and receivables indicates that the company generally pays its suppliers later than it collects from its customers.
Overall, The Gap's activity ratios show fluctuations in operating efficiency over time, with improvements in some areas and challenges in others. Further analysis and comparison with industry benchmarks would provide a more comprehensive assessment of the company's performance in managing its working capital components.
Long-term
| Feb 1, 2025 | Nov 2, 2024 | Aug 3, 2024 | May 4, 2024 | Feb 3, 2024 | Oct 28, 2023 | Jul 29, 2023 | Apr 29, 2023 | Jan 28, 2023 | Oct 29, 2022 | Jul 30, 2022 | Apr 30, 2022 | Jan 29, 2022 | Oct 30, 2021 | Jul 31, 2021 | May 1, 2021 | Jan 30, 2021 | Oct 31, 2020 | Aug 1, 2020 | May 2, 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Fixed asset turnover | 6.04 | 5.98 | 6.01 | 5.93 | 5.80 | 5.81 | 5.82 | 5.83 | 5.81 | 5.70 | 5.63 | 5.79 | 5.49 | 5.67 | 5.74 | 5.52 | 4.86 | 4.94 | 4.85 | 5.02 |
| Total asset turnover | 1.27 | 1.29 | 1.32 | 1.38 | 1.35 | 1.34 | 1.39 | 1.41 | 1.37 | 1.32 | 1.30 | 1.32 | 1.31 | 1.30 | 1.21 | 1.15 | 1.00 | 0.98 | 1.02 | 1.16 |
The fixed asset turnover ratio of The Gap, Inc. has shown a generally positive trend over the period, indicating that the company has been able to generate more sales revenue from its fixed assets. The ratio started at 5.02 in May 2020, experienced fluctuations, and reached a peak of 6.04 in February 2025, suggesting improved efficiency in utilizing fixed assets to generate revenue.
On the other hand, the total asset turnover ratio, which measures the overall efficiency of the company in generating sales from all assets, fluctuated over the period. It started at 1.16 in May 2020, decreased, then gradually increased to reach 1.27 in February 2025. This indicates that the company has been able to generate more sales relative to its total assets in recent periods.
Overall, the upward trend in both fixed asset turnover and total asset turnover ratios suggests that The Gap, Inc. has managed its assets efficiently over the period, effectively utilizing its fixed assets to generate sales revenue and improving overall asset utilization.