Answered: Assume that Gap has no stock options or…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Income statement for the year ended January 28, 2012
Net sales
$14,549
Cost of sales
9,275
Gross profit
$ 5,274
Operating expenses
3,836
Operating income
1,438
Interest expenses, net
69
Income before income taxes
$ 1,369
Income taxes
536
Net income
$ 833
Balance sheet
January 28, 2012
January 29, 2011
Assets
Cash and cash equivalents
$ 1,885
$1,561
Inventories
1,615
1,620
Other current assets (summarized)
809
745
Total current assets
$ 4,309
$3,926
Property and equipment (net)
2,523
2,563
Other assets
590
576
Total assets
$ 7,422
$7,065
Liabilities and stockholders' equity
Current liabilities (summarized)
$ 2,128
$2,095
Long-term liabilities (summarized)
2,539
890
Total liabilities
$ 4,667
$2,985
Stockholders' equity (summarized)
2,755
4,080
Total liabilities and stockholders' equity
$ 7,422
$7,065
Exhibit 17-9
Gap, Inc.
Income Statement and Balance Sheet (in millions)

Transcribed Image Text:17-B5 Financial Ratios Gap, Inc. is a leading global specialty apparel company with 3,263 Company-operated and franchise store locations in 2012. The company was established in 1969 and has several well-known brand names such as Gap, Banana Republic, and Old Navy. Excerpts from the company's annual report for the fiscal year ended January 28, 2012, are in Exhibit 17-9. Gap paid cash dividends of $ .45 per common share in fiscal 2012, and an average of 529 million shares were outstanding during the year. 742 PART 5 • BASIC FINANCIAL ACCOUNTING Assume that Gap has no stock options or convertible securities. The company's market price on January 28, 2012, was $18.93 per share. Compute the following financial ratios for fiscal 2012: 1. Current ratio 2. Total debt to equity 3. Gross profit rate 4. Return on sales 5. Return on stockholders' equity 6. Earnings per share 7. Price earnings 8. Dividend yield 9. Dividend payout

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Ratio analysis means where different ratio of various years of years companies has been compared and results are interpreted to make effective decision regarding future course of action.

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