Refer to the income statements for The Gap, Inc., presented below. a. Prepare common-size income statements...

Transcribed Image Text:

Refer to the income statements for The Gap, Inc., presented below. a. Prepare common-size income statements for fiscal years 2014 (ending January 31, 2015) and 2013 (ending February 1, 2014). Round answers to one decimal place (i.e., 0.2568 = 25.7%). The Gap, Inc. Common-Size Income Statements Jan. 31, 2015 Fiscal year ended Feb. 1, 2014 Net sales $16,435 $16,148 0% 0% 0% 9,855 Cost of goods sold & occupancy expenses 10,146 0% Gross profit 6,289 0% 6,293 0% Operating expenses 4,206 0% 4,144 0% Operating income 2,083 0% 2,149 0% Interest expense 75 0% 61 0% Interest income (5) 0% (5) 0% Income before income taxes 2,013 0% 2,093 0% Income taxes 751 0% 813 0% Net earnings $1,262 0% $1,280 0% b. Prepare an income statement forecast for the fiscal year 2015 (ending January 30, 2016), based on the following assumptions: • Net sales total $15,000 million. • Cost of goods sold and occupancy expenses are 64% of sales. • Operating expenses total 26% of sales. • Interest income and interest expense are unchanged from the 2014 amounts. The Gap's effective tax rate is 39%. Round answers to the nearest dollar. Use rounded answers for subsequent calculations. Use a negative sign with your interest income answer only. The Gap, Inc. Proforma Income Statement Jan. 30, 2016 Net sales $ 0 Cost of goods sold & occupancy expenses 0 Gross profit 0 Operating expenses Operating income Interest expense Interest income Income before income taxes Income taxes Net earnings $ ooooooo 0 Refer to the income statements for The Gap, Inc., presented below. a. Prepare common-size income statements for fiscal years 2014 (ending January 31, 2015) and 2013 (ending February 1, 2014). Round answers to one decimal place (i.e., 0.2568 = 25.7%). The Gap, Inc. Common-Size Income Statements Jan. 31, 2015 Fiscal year ended Feb. 1, 2014 Net sales $16,435 $16,148 0% 0% 0% 9,855 Cost of goods sold & occupancy expenses 10,146 0% Gross profit 6,289 0% 6,293 0% Operating expenses 4,206 0% 4,144 0% Operating income 2,083 0% 2,149 0% Interest expense 75 0% 61 0% Interest income (5) 0% (5) 0% Income before income taxes 2,013 0% 2,093 0% Income taxes 751 0% 813 0% Net earnings $1,262 0% $1,280 0% b. Prepare an income statement forecast for the fiscal year 2015 (ending January 30, 2016), based on the following assumptions: • Net sales total $15,000 million. • Cost of goods sold and occupancy expenses are 64% of sales. • Operating expenses total 26% of sales. • Interest income and interest expense are unchanged from the 2014 amounts. The Gap's effective tax rate is 39%. Round answers to the nearest dollar. Use rounded answers for subsequent calculations. Use a negative sign with your interest income answer only. The Gap, Inc. Proforma Income Statement Jan. 30, 2016 Net sales $ 0 Cost of goods sold & occupancy expenses 0 Gross profit 0 Operating expenses Operating income Interest expense Interest income Income before income taxes Income taxes Net earnings $ ooooooo 0

Answer rating: 100% (QA)

The Gap Inc Common Size Income statements Fiscal year ended Jan 312015 Feb 12014 Net sales 1... View the full answer