The Gap, Inc. (GAP)

Return on assets (ROA)

		Feb 1, 2025	Feb 3, 2024	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021
Net income	US$ in thousands	844,000	502,000	-202,000	256,000	-665,000
Total assets	US$ in thousands	11,885,000	11,044,000	11,386,000	12,761,000	13,769,000
ROA		7.10%	4.55%	-1.77%	2.01%	-4.83%

February 1, 2025 calculation

ROA = Net income ÷ Total assets
= $844,000K ÷ $11,885,000K
= 7.10%

The Return on Assets (ROA) is a key financial ratio that measures a company's ability to generate profits from its total assets. Analyzing The Gap, Inc.'s ROA over the five-year period reveals fluctuations in the company's asset efficiency and profitability.

In January 30, 2021, The Gap, Inc. had a negative ROA of -4.83%, indicating that the company generated a loss relative to its total assets. This suggests potential inefficiencies in asset utilization or operational performance during that period.

By January 29, 2022, The Gap, Inc. improved its ROA to 2.01%, showing a positive turnaround in generating profits from assets. This increase may suggest enhanced operational efficiency or strategic improvements in utilizing resources effectively.

The following year, on January 28, 2023, the ROA dropped to -1.77%, indicating a decline in profitability relative to total assets. This decrease might result from various factors such as increased expenses, lower revenue generation, or suboptimal asset management.

On February 3, 2024, The Gap, Inc. experienced a notable improvement in ROA, reaching 4.55%. This indicates a significant boost in profitability compared to the preceding year, potentially resulting from effective cost management, revenue growth, or enhanced asset utilization.

Finally, by February 1, 2025, The Gap, Inc. achieved an ROA of 7.10%, reflecting strong profitability relative to its asset base. This substantial increase suggests that the company efficiently utilized its assets to generate higher returns and maximize profitability.

Overall, analyzing The Gap, Inc.'s ROA trend reveals a mix of challenges and successes in asset management and profitability over the five-year period, highlighting the company's efforts to enhance operational efficiency and drive profitability.