The Gap, Inc. (GAP)

Cash conversion cycle

		Feb 1, 2025	Feb 3, 2024	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021
Days of inventory on hand (DOH)	days	85.16	79.90	85.01	109.79	98.36
Days of sales outstanding (DSO)	days	7.28	7.08	7.95	8.74	9.60
Number of days of payables	days	61.31	54.03	46.97	70.98	69.95
Cash conversion cycle	days	31.14	32.96	45.99	47.55	38.01

February 1, 2025 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 85.16 + 7.28 – 61.31
= 31.14

The cash conversion cycle of The Gap, Inc. has shown some fluctuations over the past five years.

In January 2021, the cash conversion cycle was 38.01 days, indicating that the company took approximately 38 days to convert its investments in inventory into cash flows from sales.

This cycle increased to 47.55 days by January 2022, suggesting a longer period for the company to convert its resources into cash. However, by January 2023, the cycle decreased slightly to 45.99 days, showing some improvement in the efficiency of converting its working capital.

A significant improvement was recorded by February 2024, with the cash conversion cycle dropping to 32.96 days. This suggests that The Gap, Inc. was more efficient in managing its working capital and converting it into cash during that period.

The trend continued to improve by February 2025, with the cash conversion cycle further reducing to 31.14 days, indicating enhanced efficiency in managing inventory, accounts receivable, and accounts payable.

Overall, The Gap, Inc. has shown fluctuations in its cash conversion cycle over the past five years, but there were instances of improvement, especially in 2024 and 2025, where the company demonstrated better efficiency in converting its working capital into cash.