The Gap, Inc. (GAP)

Debt-to-capital ratio

		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
Long-term debt	US$ in thousands	1,489,000	1,489,000	1,488,000	1,488,000	1,487,000	1,487,000	1,486,000	1,486,000	1,485,000	1,485,000	1,484,000	1,484,000	2,220,000	2,218,000	2,216,000	2,214,000	2,212,000	1,250,000	1,249,000	1,249,000
Total stockholders’ equity	US$ in thousands	2,901,000	2,707,000	2,595,000	2,460,000	2,263,000	2,185,000	2,233,000	2,571,000	2,305,000	2,454,000	2,722,000	2,787,000	3,020,000	2,806,000	2,614,000	2,371,000	2,253,000	2,317,000	3,316,000	3,634,000
Debt-to-capital ratio		0.34	0.35	0.36	0.38	0.40	0.40	0.40	0.37	0.39	0.38	0.35	0.35	0.42	0.44	0.46	0.48	0.50	0.35	0.27	0.26

August 3, 2024 calculation

Debt-to-capital ratio = Long-term debt ÷ (Long-term debt + Total stockholders’ equity)
= $1,489,000K ÷ ($1,489,000K + $2,901,000K)
= 0.34

The debt-to-capital ratio of The Gap, Inc. has fluctuated over the periods analyzed. The ratio indicates the proportion of the company's capital that is financed through debt. The trend in the ratio shows an increase from 0.26 in November 2019 to 0.50 in August 2020, suggesting a significant rise in the utilization of debt to finance the company's operations.

Subsequently, the ratio exhibited a downward trend until January 2023, indicating a decrease in the proportion of debt within the company's capital structure. However, from January 2023 to August 2024, the ratio showed a fluctuating pattern, varying between 0.34 and 0.40. This variability may suggest changes in the company's debt and equity levels during this period.

Overall, a higher debt-to-capital ratio implies higher financial leverage and potential risk due to increased interest payments and debt obligations. The company's management should closely monitor this ratio to ensure a balanced capital structure that aligns with the company's financial goals and risk tolerance.