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What is the percentage of debt used to finance Gap? ____________ What is the percentage of owner’s equity used to finance Gap? ____________ What is the significance of these two percentages? ________________________________________________________________________________________________________________

What is the percentage of debt used to finance Gap? ____________ What is the percentage of owner’s equity used to finance Gap? ____________ What is the significance of these two percentages? ________________________________________________________________________________________________________________

FINANCIAL ACCOUNTING
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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  1. What is the percentage of debt used to finance Gap? ____________
  2. What is the percentage of owner’s equity used to finance Gap? ____________
  3. What is the significance of these two percentages? ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
THE GAP, INC. CONSOLIDATED STATEMENTS OF INCOME Fiscal Year 2019 16,383 $ ($ and shares in millions except per share amounts) 2018 2017 Net sales 16,580 $ 15,855 9,789 6,066 Cost of goods sold and occupancy expenses Gross profit Operating expenses Operating income Interest expense 10,250 10,258 6,322 6,133 4,587 1,479 5,559 4,960 1,362 574 76 73 74 (30) (33) 1,322 (19) 1,424 Interest income Income before income taxes 528 Income taxes 177 319 576 Net income $ 351 $ 1,003 $ 848 Weighted-average number of shares-basic 376 385 393 Weighted-average number of shares-diluted 378 388 396 Earnings per share-basic $ 0.93 $ 2.61 $ 2.16 Earnings per share diluted $ 0.93 $ 2.59 $ 2.14 Cash dividends declared and paid per share 0.97 $ 0.97 $ 0.92 %24
Transcribed Image Text:THE GAP, INC. CONSOLIDATED STATEMENTS OF INCOME Fiscal Year 2019 16,383 $ ($ and shares in millions except per share amounts) 2018 2017 Net sales 16,580 $ 15,855 9,789 6,066 Cost of goods sold and occupancy expenses Gross profit Operating expenses Operating income Interest expense 10,250 10,258 6,322 6,133 4,587 1,479 5,559 4,960 1,362 574 76 73 74 (30) (33) 1,322 (19) 1,424 Interest income Income before income taxes 528 Income taxes 177 319 576 Net income $ 351 $ 1,003 $ 848 Weighted-average number of shares-basic 376 385 393 Weighted-average number of shares-diluted 378 388 396 Earnings per share-basic $ 0.93 $ 2.61 $ 2.16 Earnings per share diluted $ 0.93 $ 2.59 $ 2.14 Cash dividends declared and paid per share 0.97 $ 0.97 $ 0.92 %24
February 1, 2020 February 2, 2019 ($ and shares in millions except par value) ASSETS Current assets: Cash and cash equivalents 1,364 $ 1,081 Short-term investments 290 288 Merchandise inventory 2,156 2,131 Other current assets 706 751 Total current assets 4,516 4,251 Property and equipment, net of accumulated depreciation of $5,839 and $5,755 2,912 3,122 Operating lease assets Other long-term assets Total assets 5,402 639 886 $ 13,679 $ 8,049 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: 1,174 $ 1,126 Accounts payable Accrued expenses and other current liabilities 1,067 1,024 Current portion of operating lease liabilities Income taxes payable 920 48 24 Total current liabilities 3,209 2,174 Long-term liabilities: Long-term debt Long-term operating lease liabilities Lease incentives and other long-term liabilities Total long-term liabilities Commitments and contingencies (see Note 16) Stockholders' equity: Common stock $0.05 par value Authorized 2,300 shares for all periods presented; Issued and Outstanding 371 and 378 shares 1,249 1,249 5,508 397 1,073 2,322 7,154 19 19 Additional paid-in capital Retained earnings Accumulated other comprehensive income Total stockholders' equity Total liabilities and stockholders' equity 3,257 3,481 40 53 3,316 13,679 $ 3,553 $ 8,049
Transcribed Image Text:February 1, 2020 February 2, 2019 ($ and shares in millions except par value) ASSETS Current assets: Cash and cash equivalents 1,364 $ 1,081 Short-term investments 290 288 Merchandise inventory 2,156 2,131 Other current assets 706 751 Total current assets 4,516 4,251 Property and equipment, net of accumulated depreciation of $5,839 and $5,755 2,912 3,122 Operating lease assets Other long-term assets Total assets 5,402 639 886 $ 13,679 $ 8,049 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: 1,174 $ 1,126 Accounts payable Accrued expenses and other current liabilities 1,067 1,024 Current portion of operating lease liabilities Income taxes payable 920 48 24 Total current liabilities 3,209 2,174 Long-term liabilities: Long-term debt Long-term operating lease liabilities Lease incentives and other long-term liabilities Total long-term liabilities Commitments and contingencies (see Note 16) Stockholders' equity: Common stock $0.05 par value Authorized 2,300 shares for all periods presented; Issued and Outstanding 371 and 378 shares 1,249 1,249 5,508 397 1,073 2,322 7,154 19 19 Additional paid-in capital Retained earnings Accumulated other comprehensive income Total stockholders' equity Total liabilities and stockholders' equity 3,257 3,481 40 53 3,316 13,679 $ 3,553 $ 8,049
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