14. Use Gap, Inc.'s, financial statements available on the Web at www.mhhe.com/higgins8e to answer the questions below.

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14. Use Gap, Inc.'s, financial statements available on the Web at www.mhhe.com/higgins8e to answer the questions below. (Select Stu- dent Edition > Choose a Chapter > Excel Spreadsheets.) Use the company's Operating Profit as an approximation of its EBIT, and you may assume a 40 percent tax rate for your calculations.

a. For the fiscal years ending in January of 2003 and 2004, calculate (1) Gap's total liabilities-to-equity ratio; (2) Times interest earned ratio; and (3) Times burden covered.

b. What percentage decline in earnings before interest and taxes could Gap have sustained in fiscal years 2003 and 2004 before fail- ing to cover (1) Principal repayment requirements, (2) Common dividend payments?

c. Prepare common-size financial statements for Gap, Inc., for 2002-2004.

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