The Gap, Inc. (GAP)
Activity ratios
Short-term
Turnover ratios
| 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 | Feb 1, 2020 | Nov 2, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Inventory turnover | 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 | 4.75 | 3.76 |
| Receivables turnover | — | — | 51.52 | — | — | — | 45.93 | — | — | — | 41.78 | — | — | — | 38.02 | — | — | — | 51.84 | — |
| Payables turnover | 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 | 8.73 | 8.24 |
| Working capital turnover | 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 | 12.53 | 11.83 |
The activity ratios of The Gap, Inc. provide insights into the company's efficiency in managing its assets and liabilities.
1. Inventory turnover: The trend shows fluctuations over time with the turnover ratio ranging from 3.17 to 4.75. A higher inventory turnover indicates that the company is selling its products quickly, which is generally positive as it minimizes holding costs and reduces the risk of inventory obsolescence.
2. Receivables turnover: Data is missing for certain periods, but the turnover ratio ranged from 38.02 to 51.84 when available. A higher receivables turnover suggests that the company efficiently collects payments from customers, which is beneficial for maintaining healthy cash flow.
3. Payables turnover: The payables turnover ratio varied between 5.14 and 10.02, indicating differences in how quickly the company pays its suppliers. A higher turnover ratio may signify that The Gap is managing its payables effectively, potentially benefiting from trade credit terms.
4. Working capital turnover: This ratio ranged from 6.50 to 18.83, reflecting how efficiently the company utilizes its working capital to generate sales. A higher turnover ratio suggests that the company is effectively leveraging its resources to drive revenue.
Overall, analyzing these activity ratios can help assess The Gap, Inc.'s operational performance and effectiveness in managing its resources to support its revenue generation and liquidity.
Average number of days
| 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 | Feb 1, 2020 | Nov 2, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 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 | 76.77 | 97.07 |
| Days of sales outstanding (DSO) | days | — | — | 7.08 | — | — | — | 7.95 | — | — | — | 8.74 | — | — | — | 9.60 | — | — | — | 7.04 | — |
| Number of days of payables | days | 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 | 41.81 | 44.29 |
The analysis of The Gap, Inc.'s activity ratios reveals fluctuations in its operational efficiency over the time periods indicated.
1. Days of Inventory on Hand (DOH): The company has shown varying levels of inventory management efficiency, with the number of days of inventory on hand ranging from a low of 76.77 days to a high of 115.06 days. A lower number of days of inventory on hand reflects better inventory turnover and liquidity, whereas a higher number may signify potential inventory management challenges or slower sales.
2. Days of Sales Outstanding (DSO): The DSO metric indicates the average number of days it takes for the company to collect revenue after a sale is made. The data provided shows fluctuating values, with some periods not available. The company should aim to keep this metric low to manage its accounts receivable effectively and ensure timely cash flow.
3. Number of Days of Payables: The number of days of payables represents how long it takes the company to pay its suppliers. The data displays variability in this ratio, with the number of days ranging from 36.44 days to 89.27 days. A longer period of payables may indicate good negotiation terms with suppliers, but it could also signify liquidity issues or strained supplier relationships.
In conclusion, The Gap, Inc. should strive for a balance in its activity ratios to optimize its working capital management and overall operational efficiency. Monitoring and improving these ratios can lead to enhanced financial performance and sustainable growth in the long term.
Long-term
| 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 | Feb 1, 2020 | Nov 2, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Fixed asset turnover | 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 | 5.25 | 5.06 |
| Total asset turnover | 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 | 1.20 | 1.16 |
The fixed asset turnover ratio for The Gap, Inc. has been relatively stable over the past several quarters, ranging from 5.63 to 6.01. This indicates that the company is generating approximately $5.63 to $6.01 in sales for every dollar invested in fixed assets. The consistent levels of this ratio suggest that the company is efficiently utilizing its fixed assets to generate revenue.
On the other hand, the total asset turnover ratio has shown some fluctuation over the same period, with values ranging from 0.98 to 1.41. This ratio measures the company's ability to generate sales from its total assets. The increasing trend observed in the total asset turnover ratio from 2021 to 2024 implies that The Gap, Inc. has been more effective in utilizing its total assets to generate sales.
Overall, the analysis of long-term activity ratios indicates that The Gap, Inc. has been efficiently managing both its fixed assets and total assets to drive sales growth, as evidenced by the stable fixed asset turnover and the improving trend in total asset turnover.