The Gap Inc. and lululemon athletica inc. are specialty clothing merchandisers. Here are recent financial data for the companies:

Instructionsa. Calculate the debt to total assets and interest coverage ratios for Gap and lululemon.

b. Discuss the solvency of each company compared with the other.

c. The notes to the financial statements for Gap and lululemon indicate that the companies have significant operating lease commitments.

Discuss the implications of these operating leases for each company?s solvency.

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The Gap Inc. (in USS millions) lululemon athletica inc. (in US$ millions) Balance sheet data February 3, 2018 January 28, 2018 Total assets $7,989 $1,998 Total liabilities 2,384 402 Year ended Year ended Income statement data February 3, 2018 January 28, 2018 $ 74 Interest expense Income tax expense Profit 576 201 848 259