Financial Position of Gap Inc.

Topics: Generally Accepted Accounting Principles, Depreciation, Inventory Pages: 2 (572 words) Published: October 16, 2011
Financial Position of Gap Inc.
While Gap Inc. has had decreases in net sales over the past years they are in a financially strong position currently. Also in 2009 the decrease in net sales slowed to only a 2 percent fall from the previous year of 12 percent. The Net income for fiscal 2009 increased 14.0 percent to $1.1 billion, compared with $967 million, for fiscal 2008. Also Net income increased for 2008 by 16.0 percent from 2007 where net income was only $833 million. The gross margins have also increased for fiscal 2009 where it was 40.32 percent as compared to 2008 of 37.5 percent and 2007 of 36.11 percent. The operating margins also continue to grow for fiscal 2009 Gap had an operating margin on 12.8 percent as compared to 10.7 percent from 2008 and 8.3 percent in 2007. Gap has also been able to grow its cash not only each year but also as a percentage of total assets. For fiscal 2009 Gap has 2.3 billion in cash which was 29.4 percent of its total assets as compared to 2008 where cash was only at 1.7 billion and 22.6 percent of total assets. Gap also has worked to reduce their debt down to zero by 2010 and they have done so, currently they have no long-term debt and 2.3 billion in cash. The 2009 current ratio for Gap is 2.19 as compared to 1.88 in 2008, and 1.67 in 2007. Gap is increasing their liquidity from year to year while net sales are still decreasing. Gaps merchandise inventory has also seen a decrease not only in value but also as a percentage of total assets 2007 Gap had merchandise inventory valued at1.57 billion and that represented 20.1 percent. Inventory was 1.50 billion and represented 19.9 percent of total assets in 2008. In 2009 the merchandise inventory was 1.47 billion and represented 18.5 percent of total assets.

The operating expenses for Gap have maintained constant from 2005-2009 when looking at them as a percentage of sales. The difference in percentage from year to year changed only by a few tenths of percentage. Income from...
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