Financing Activities Analysis of The Gap, Inc. and Nordstrom, Inc. Financial Statement Analysis
April 24, 2013
The Gap, Inc. and Nordstrom, Inc. are retail companies with similar aspirations, yet different business strategies. Both strive to be top competitors in the retail industry and have generated and maintained a steady customer demand for their products and services. Their journeys to competitiveness in this industry have been based on very different strategies, however. This report is an analysis of the companies’ financing activities in relation to management reporting versus user decisions regarding risk. Analysis of each company’s long-term debt obligations and shareholder’s equity provides a deeper understanding of financial position, and the question of whether the information given by preparers is quality information for users can be answered. Backgrounds and Strategies
Gap, Inc. was founded in 1969 by Doris Fisher and her husband Don and operates as an apparel retail company with product lines for men, women, children and babies under the Gap, Old Navy, Banana Republic, Piperlime, Athleta and Intermix brands. The Gap’s newest mission is to “be the world’s favorite for American style” (Gap 10-K, 2013). It operates via two segments, Stores and Direct, and has franchise agreements in Australia, Asia, Latin America, Eastern Europe, Africa and the Middle East. It also sells third party designs and brands through Piperlime, Intermix and certain Gap stores. The company currently has around 3,100 stores and 300 franchised stores in 90 countries, and seems to be continuing its strategic intent to increase its global reach (Yahoo! Finance, 2013).
Nordstrom, Inc. is a much older company, founded in 1901 as a retail shoe business in Seattle and later incorporated in 1946. Nordstrom has over the years become one of the “leading fashion specialty retailers based in the US” (Nordstrom 10-K, 2013). Nordstrom operates through two segments,...
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