Are Gap Inc’s Earnings Volatile?

June 1st, 2016 by Trefis Team
  • Despite the company not being in the best shape over the last three years, Gap Inc’s capital structure has prevented its earnings for becoming volatile.
  • Since both debt and interest payments are low relative to its EBIT, the company does not have a high degree of leverage
  • Moreover, its degree of leverage has remained stable over the past three years and we don’t expect it to increase much in the coming years
  • And the marginal increase is expected to come from a rebound in interest expense rates

Gap Inc degree of financial leverage

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Gap Inc
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