The Gap, Inc. (GAP)

Return on total capital

		Feb 3, 2024	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	646,000	-51,000	490,000	-910,000	604,000
Long-term debt	US$ in thousands	1,488,000	1,486,000	1,484,000	2,216,000	1,249,000
Total stockholders’ equity	US$ in thousands	2,595,000	2,233,000	2,722,000	2,614,000	3,316,000
Return on total capital		15.82%	-1.37%	11.65%	-18.84%	13.23%

February 3, 2024 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $646,000K ÷ ($1,488,000K + $2,595,000K)
= 15.82%

Looking at The Gap, Inc.'s return on total capital over the past five years, there has been significant volatility in the performance. The company achieved a return on total capital of 15.82% as of February 3, 2024, showing an improvement from the previous year's negative return of -1.37%. This indicates that the company has been able to generate a positive return on its total capital in the latest fiscal year.

In the preceding years, the return on total capital fluctuated, with positive returns seen in the fiscal years ending in 2022 and 2020, and negative returns in the fiscal years ending in 2023 and 2021. Notably, the highest return on total capital was recorded in 2020 at 13.23%, and the lowest was in 2021 at -18.84%.

The fluctuating trend in return on total capital suggests that The Gap, Inc. may have experienced challenges in efficiently utilizing its total capital to generate profits consistently in recent years. Analyzing the underlying factors contributing to these fluctuations would be crucial in understanding the company's financial performance and strategic decision-making.