The Gap, Inc. (GAP)
Interest coverage
| Feb 1, 2025 | Nov 2, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 1,224,000 | 1,175,000 | 1,069,000 | 872,000 | 646,000 | 386,000 | 298,000 | 148,000 | -51,000 | -23,000 | -384,000 | 53,000 | 490,000 | 617,000 | 964,000 | 571,000 | -910,000 | -1,283,000 | -1,231,000 | -958,000 |
| Interest expense (ttm) | US$ in thousands | 87,000 | 92,000 | 97,000 | 88,000 | 90,000 | 91,000 | 85,000 | 91,000 | 88,000 | 81,000 | 103,000 | 133,000 | 167,000 | 209,000 | 220,000 | 227,000 | 192,000 | 150,000 | 114,000 | 75,000 |
| Interest coverage | 14.07 | 12.77 | 11.02 | 9.91 | 7.18 | 4.24 | 3.51 | 1.63 | -0.58 | -0.28 | -3.73 | 0.40 | 2.93 | 2.95 | 4.38 | 2.52 | -4.74 | -8.55 | -10.80 | -12.77 |
February 1, 2025 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,224,000K ÷ $87,000K
= 14.07
The interest coverage ratio for The Gap, Inc. has fluctuated significantly over the period provided. The ratio was negative in the earlier periods, indicating that the company's earnings were insufficient to cover its interest expenses. However, there has been a gradual improvement in the interest coverage ratio starting from the first quarter of 2021, moving from negative to positive values. This demonstrates that the company's earnings have become more sufficient to cover its interest obligations.
The interest coverage ratio reached its lowest point in April 2022 at 0.40, indicating a relatively higher risk of default on interest payments. However, there has been a steady increase in the interest coverage ratio since then, reaching 14.07 in February 2025. This indicates a significant improvement in the company's ability to meet its interest obligations with its operating earnings.
Overall, the trend in The Gap, Inc.'s interest coverage ratio shows a positive trajectory, reflecting an enhanced capacity to service its debt through operational earnings. Still, it would be important to monitor this ratio in subsequent periods to ensure that the company can sustain this improved performance in managing its interest expenses.
Peer comparison
Feb 1, 2025