The Gap, Inc. (GAP)
Interest coverage
| Feb 1, 2025 | Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 1,224,000 | 646,000 | -51,000 | 490,000 | -910,000 |
| Interest expense | US$ in thousands | 87,000 | 90,000 | 88,000 | 167,000 | 192,000 |
| Interest coverage | 14.07 | 7.18 | -0.58 | 2.93 | -4.74 |
February 1, 2025 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,224,000K ÷ $87,000K
= 14.07
The interest coverage ratio for The Gap, Inc. has fluctuated over the past five years. As of January 30, 2021, the company's interest coverage was -4.74, indicating that the company's operating income was insufficient to cover its interest expenses. However, by January 29, 2022, the ratio improved to 2.93, suggesting that the company's earnings were able to cover its interest payments to a better extent.
Despite the improvement in 2022, the interest coverage deteriorated significantly to -0.58 by January 28, 2023, indicating a potential strain on the company's ability to meet its interest obligations. The trend reversed positively by February 3, 2024, with an interest coverage of 7.18, signaling a healthier financial position.
Continuing this positive trend, The Gap, Inc. demonstrated robust interest coverage of 14.07 as of February 1, 2025, indicating a strong ability to meet its interest payments from its operating income. Overall, the company's interest coverage has shown volatility over the period but seems to have improved significantly in recent years, pointing towards enhanced financial stability.
Peer comparison
Feb 1, 2025