The Gap, Inc. (GAP)
Liquidity 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.49 | 1.50 | 1.42 | 1.39 | 1.41 | 1.47 | 1.42 | 1.49 | 1.37 | 1.44 | 1.27 | 1.36 | 1.70 | 1.65 | 1.55 | 1.44 | 1.46 | 1.23 | 1.41 | 1.43 |
| Quick ratio | 0.67 | 0.62 | 0.70 | 0.43 | 0.45 | 0.40 | 0.48 | 0.20 | 0.20 | 0.24 | 0.31 | 0.28 | 0.74 | 0.70 | 0.71 | 0.60 | 0.61 | 0.31 | 0.61 | 0.34 |
| Cash ratio | 0.67 | 0.62 | 0.60 | 0.43 | 0.45 | 0.40 | 0.38 | 0.20 | 0.20 | 0.24 | 0.22 | 0.28 | 0.74 | 0.70 | 0.62 | 0.60 | 0.61 | 0.31 | 0.52 | 0.34 |
The liquidity ratios of The Gap, Inc. indicate the company's ability to meet its short-term financial obligations. Looking at the current ratio, which measures the company's ability to cover its current liabilities with its current assets, we see a general trend of the ratio hovering around 1.4 to 1.5 over the past few quarters. This suggests that The Gap has a comfortable level of current assets to meet its short-term obligations.
Moving on to the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, we observe more fluctuation in the ratio. The quick ratio has ranged from a low of 0.20 to a high of 0.74. This indicates that, at times, the company may face challenges in meeting its immediate liabilities without relying on selling inventory.
Lastly, the cash ratio, which is the most conservative liquidity ratio and measures the company's ability to cover current liabilities with its cash and cash equivalents only, shows a similar trend to the quick ratio. The cash ratio has varied between 0.20 to 0.74, highlighting the importance of cash holdings in supporting short-term liquidity needs.
Overall, while the current ratio suggests a generally healthy liquidity position for The Gap, Inc., the quick and cash ratios show more variability and indicate the importance of managing cash effectively to meet immediate obligations. Monitoring these ratios over time can provide insights into the company's liquidity management and financial health.
Additional liquidity measure
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 23.82 | 30.51 | 32.96 | 37.02 | 31.09 | 40.40 | 45.99 | 57.86 | 53.54 | 57.00 | 47.55 | 40.69 | 25.79 | 31.88 | 38.01 | 18.10 | 23.79 | 46.76 | 42.01 | 52.78 |
The cash conversion cycle of The Gap, Inc. fluctuated over the periods, indicating changes in its efficiency in managing working capital. The cash conversion cycle represents the time it takes for a company to convert its investments in inventory into cash flows from sales.
From Nov 2, 2019, to Aug 3, 2024, the cash conversion cycle ranged from 18.10 days to 57.86 days. A lower value indicates that the company is able to sell inventory, collect receivables, and pay its liabilities more quickly, thus improving liquidity.
In general, the trend shows that there were fluctuations in the cash conversion cycle, with some periods showing shorter cycles and others longer. A shorter cash conversion cycle is generally favorable as it signifies that the company is managing its working capital efficiently and converting inventory into cash quickly.
Analyzing the specific reasons for these fluctuations, such as changes in inventory management, sales efficiency, and collection periods, can provide insights into The Gap, Inc.'s operational and financial performance over the periods in question.