Problem 2: Financial Ratios

The GAP Macys

1 Current Ratio		1.18
2 Quick/Acid Test Ratio		.19
3 Working Capital $millions		$ 1,060
4 Inventory Turnover in Days		126 days
5 Gross Profit %		40.1%
6 Operating Income %		3.8%
7 Profit Margin %		2.2 %
8 Asset Turnover		1.26
9 Return on Assets		2.8%
10 Return on Stockholders Equity		8.8%
11 Earnings Per Share		$ 1.83
12 Dividend Payout Ratio		83.1%
13 Price to Earnings Ratio		8.37
14 Debt/Assets Ratio		.70
15 Times Interest Earned		4.55

Using The Gaps financial statements and the additional information given below, compute these ratios for the most current year shown fiscal year 2019 - which ended on February 1, 2020. Show all computations. (round to 2 decimal places; (percent 15% or .15)

Computations

1. Current ratio _________

2. Quick/Acid Test Ratio _________

3. Working Capital_________

4. Inventory Turnover in Days_________

5. Gross Profit Rate _________

6. Operating Income Rate _________

7. Profit Margin Rate ________

8. Asset Turnover _________

9. Return on Assets _________

10. Return on Stockholders Equity _________

11. Earnings Per Share _________

12. Dividend Payout Ratio _________

13. Price/Earnings Ratio _________

14. Debt to Assets Ratio _________

15. Times Interest Earned Ratio __________

THE GARANCE SHEET und here in See Acengarying Nors to Carsudden Statements THE GAP, INC. CONSOLIDATED STATEMENTS OF INCOME THE GAP, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Fiscal Year Fiscal Year ($ and shares in millions except per share amounts) Net sales 2019 2018 2019 2017 2018 2017 $ $ $ $ 351 $ 1,003 $ 848 (2) (17) 35 13 Cost of goods sold and occupancy expenses Gross profit Operating expenses Operating income Interest expense Interest income Income before income taxes Income taxes 54 ($ in millions) Net income Other comprehensive income (loss), net of tax: Foreign currency translation Change in fair value of derivative financial instruments, net of tax (tax benefit) of $5, $(4), and $(9) Reclassification adjustments on derivative financial instruments, net of (tax) tax benefit of $(5), $6, and $3 Other comprehensive income (loss), net of tax Comprehensive income 16,383 10,250 6,133 5,559 574 76 (30) 528 177 351 16,580 10,258 6,322 4,960 1,362 73 (33) 1,322 319 1,003 15,855 9,789 6,066 4,587 1,479 74 (19) 1,424 576 (51) (24) (13) 338 (20) 17 (2) (18) $ $ 1,020 $ 830 Net income $ $ $ 848 376 378 Weighted-average number of shares-basic Weighted average number of shares-diluted Earnings per sharebasic Earnings per share-diluted Cash dividends declared and paid per share $ 0.93 $ 385 388 2.61 2.59 0.97 393 396 2.16 2.14 0.92 0.93 $ $ $ $ $ $ 0.97 $ THE GAP, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Accumulated Corporate no 51 21 NA 116) 33 1361) 3,144 36 36 1.000 17 Comen Blech Amal Pak. Sandales lors escut per alwa anunta Shar Amunt Capital Eamlar Balance of lawry 21, 2017 23 201 41 mula wilach i midtsha- Opera 101 Net 341 terrengenalan Representant 168 WAT GOTT Wolore and relyesek Lese 2 3 Snel which is mortar la vie sects Show our penale, new TS Concu por! Beleness of February 2018 380 13 2,03 Currin water anders recognition . Nel 10 OPINII, tot Resuchen normale 11821 1200) Inne i koppen ha para 2 IMT Colecer las puertain to y CAS 1 1222 Steper set of futetures 191 Cock deden 0.7 gestum Ta, Blanco Forwary 2, 2018 STS 12 2.461 Change in bed lines 166 191 Organisatsnelles HINGTON I do aplicare puder 1 If I dog ek lewatret slaskunta 2 1211 Share-bared to meet onnelle 21 Cortdurch SC 97 phare 1364 Ralues of February 1, 2020 171 ! - : .282 See Accompanying Notes to Consolat Fi Salomon 17 02901 12 104 171) 3.553 1941 M 53 (131 (121 F1 191 71 341 1 1310 a THE GAP, INC. CONSOLIDATED STATEMENTS OF CASH FLOW Fiscal Year 2019 2018 2017 ($ in millions) Cash flows from operating activities: Net income $ 351 $ 1,003 $ 848 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Amortization of lease incentives 557 578 559 (61) (60) 68 91 87 239 98 14 28 70 4 11 (10) 8 Share-based compensation Impairment of operating lease assets Impairment of store assets Loss on disposal of property and equipment Non-cash and other items Gain on sale of building Deferred income taxes Changes in operating assets and liabilities: Merchandise inventory Other current assets and other long-term assets Accounts payable Accrued expenses and other current liabilities Income taxes payable, net of prepaid and other tax-related items Lease incentives and other long-term liabilities (10) (191) (81) 65 61 4 (142) 105 33 (154) (18) (78) (196) 66 (90) 110 34 86 113 (52) 30 55 (61) 1,411 1,381 1,380 (705) (731) Operating lease assets and liabilities, net Net cash provided by operating activities Cash flows from investing activities: Purchases of property and equipment Purchase of building Proceeds from sale of building Purchases of short-term investments Proceeds from sales and maturities of short-term investments Purchase of Janie and Jack Insurance proceeds related to loss on property and equipment (702) (343) 220 (293) 293 (69) (464) 177 66 Other (9) (1) (666) (894) (1,001) (67) 25 46 30 (21) (200) (364) (23) (398) (373) (1) (749) (18) (315) (361) (560) (731) Net cash used for investing activities Cash flows from financing activities: Payments of debt Proceeds from issuances under share-based compensation plans Withholding tax payments related to vesting of stock units Repurchases of common stock Cash dividends paid Other Net cash used for financing activities Effect of foreign exchange rate fluctuations on cash, cash equivalents, and restricted cash Net increase (decrease) in cash, cash equivalents, and restricted cash Cash, cash equivalents, and restricted cash at beginning of period Cash, cash equivalents, and restricted cash at end of period Non-cash investing activities: Purchases of property and equipment not yet paid at end of period Supplemental disclosure of cash flow information: Cash paid for interest during the period Cash paid for income taxes during the period, net of refunds Cash paid for operating lease liabilities Page 5 of 5 4 (10) 19 (379) (39) 1,420 1.799 2 1,797 1.799 $ 1,381 $ 1,420 $ $ 85 $ 93 $ 77 $ 76 $ 76 $ 76 $ 176 $ 143 $ 570 $ 1.244 $ $