Financial Positioning for a Brand of Clothing

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This assignment is based on a financial position of a very good brand of clothing Gap Inc. in this assignment author want to tell that how company operates, what are the financial analyses? In this assignment every thing is given like companies cash flow, balance sheet from last four years and income statement as well. Author also want to tell that why company is going in loss from last four years? What are the accounts need to maintain and at last what we need to do to make profit or to cover up the loos.

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“Financial Positioning for a Brand of Clothing”

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Gap Inc. is one of the world’s biggest especially retailers, operating approx 3,100 stores in the U.S.A, Canada, the United Kingdom, France, Ireland and Japan. We operate four of the most recognized apparel brands in the world -Gap, banana republic, Old Navy, and our newest brand, Piper lime.

Organization mission and visionA 

Gap’s mission is stated as: Our purpose? Simply, to make it easy for you to express your personal style throughout your life. A  There vision is: Every day, we look for new ways to connect with customers around the world, provide value to our shareholders and make a positive contribution in the communities where we do business.A 

Main Body

Gap’s world headquarters are located in San Francisco, product development offices in New York City and distribution operations and offices coordinating outsourcing activities are located throughout the globe. One of the original mottos of the company was “Levi’s for Guys and Gals.” The Gap began creating its own private label clothing in 1982 and had stopped carrying other labels altogether by 1991. The name came from the growing differences between children and adults, called “the generation gap”, which reached its peak with the hippie movement.

Accounting has been defined as the process of identifying, measuring, recording and communicating economic information to permit informed judgements and economic decisions. The primary purpose of accounting is to help persons make economic decisions. In our society resources must be allocated among and within all kinds of entities. Accounting information provides the basis for making decisions about resource allocation.

The finance department of a company generates a variety ofA financial informationA that is helpful in decision making, including:

Profit and Loss accountsA providing details of whether the business is making efficient use of financial resources.

Balance Sheet information providing details of businesses assets and liabilities, as well as the liquidity of the business.

Sales and purchases information setting out particular types of trading and accounts with particular customers and suppliers.

Information about the purchase of assets and liabilities.

Information about the wages paid out by a business

By providing a steady and up-to-date flow of information, a business is able to make appropriate decisions about:

how to reduce costs

how to increase sales

how to raise profitability

when to purchase new capital assets

the best sources of finance, and duration etc


The owner of a company is a term that only really applies with any meaning to small businesses where the only shareholders are the people at the top of the business, the owner manager. Owner is a slight misnomer because a company, if it is registered as a limited company, is an entity in its own right. The owner just becomes the custodian of it.

The owner has strict reporting requirements on what they can do with the business and how they manage its finances. Owners, by the above definition, have an interest in almost all aspects of the company, its profit, sales, expenses, and so on.


Shareholders are the true owners of any registered business be it a limited company or a public limited company (plc). The shareholders provide one component of the capital needed to create the company and allow it to trade. Shareholders have rights over the finance of the company and, up to a point, the running of the business, although not on a day-to-day basis.

Shareholders invest money into companies by buying shares. An investor buys shares, usually, for one of two reasons:


The dividend is to a share what interest is to a loan, a periodic payment for the privilege of has use of the money loaned or invested. So for example if an investor purchases 10,000 1.00 pound shares they are investing 10,000 pounds in the company. In return for this investment they will periodically receive interest payments in the form of dividends. If the dividend is 8% they will receive 800 pounds (8% of 10,000 pounds)

Capital growth

The other reason for investing in a company is to give it the funds to allow it to grow and become bigger and more profitable. In the longer term this growth should make the initial investment worth more.


Managers have the responsibility of make the organisation perform and to achieve the goals it is set. In return they expect security and a monetary return in the form of a salary and whatever perks and performance related rewards that form part of their remuneration package. They have a much greater need for financial information because they are making detailed decisions on a daily basis.


The government has many different arms and, as such many different needs. A register of all companies is maintained by Companies House. It is to this body that the formal accounts must be submitted every year.


Investors are shareholders before they part with their money. As such they are interested in all the things a shareholder is.


Employees are seeking security of employment and a return for the work they do. Employees would therefore be looking for indications that the company is doing well enough to continue to trade into the future and is doing well enough to continue to employ them and is able to meet the salary and wages bill each month. If there is any profit or performance related component to the remuneration they will also be interested in the company performance and how close it is to triggering the bonus payments.


Customers are the people or organisations that buy products or services from the company. If the customer is using the items purchased as a component of their own product, as a radio manufacturer might buy electronic components from a component manufacturer, continuity of supply and quality at a fair price will be important

Mergers and Acquisitions

Banana Republic-known for casual luxury, with high-quality apparel for men and women and sophisticated seasonal collections of accessories, shoes, personal care products, intimate apparel and gifts for the home.

Old Navy-famous for the best in denim, graphic tees, cargos, Performance Fleece, plus the Old Navy Item of the Week -each and every week, a special item at a special price.

Forth & Towne-a unique shopping experience and destination for women. Forth & Towne will offer fashionable apparel and accessories.

In addition, Gap brands include baby Gap, Gap Kids and Gap Maternity.

Industrial Organization

Contestable Markets – Gap began dominating the apparel market as a result of its ability to fill what it perceived as “gaps” before anyone else could enter.

Economies of Scale – As an early entrant, Gap was able to take advantage of economies of scale within the industry. Economies of Scope – By expanding its market within the apparel industry, Gap was able to reduce its manufacturing costs. Product Differentiation Increased sales have resulted primarily from the Gap’s ability to expand into specialty markets, i.e., B Banana Republic, Old Navy, baby Gap, etc. Vertical Integration- Although the Gap began by selling Levi’s exclusively, its ultimate growth and dominance began once it started to manufacture products under its own label. Vertical integration also allowed Gap to lower transaction costs and reduces supply threats created by Levi’s.

Branding – The Gap’s multiple brands have become some of the most recognizable labels within the apparel industry.

Types of Business

Sole proprietorsA are unincorporated businesses. They are also called independent contractors, consultants, or freelancers. There are no forms you need to fill out to start this type of business. The only thing you need to do is report your business income and expenses on your Form 1040 Schedule C. This is the easiest form of business to set up, and the easiest to dissolve. (An LLC with only a single shareholder, a so-called single-member LLC, is taxed as a sole proprietor on a Schedule C.)

CorporationsA are incorporated businesses. Every form of business besides the sole proprietor is considered a separate entity, and this often provides a measure of legal and financial protection for the shareholders. The shareholders of corporations have limited liability protection, and corporations have full discretion over the amount of profits they can distribute or retain. Corporations are presumed to be for-profit entities, and as such they can have an unlimited number of years with losses. Corporations must have at least one shareholder.

PartnershipsA are unincorporated businesses. Like corporations, partnerships are separate entities from the shareholders. Unlike corporations, partnerships must have at lease one General Partner who assumes unlimited liability for the business. Partnerships must have at least two shareholders. Partnerships distribute all profits and losses to their shareholders without regard for any profits retained by the business for cash flow purposes.


At the end of the assignment author would like to conclude that according to the data gross and net profit was going down but in the 2008 it was bit up. But if we will talk about the ration which we found at the first of the assignment that is going down because of the liabilities, liabilities are still there but cash is going down. Author would to recommend that by doing more advertisement, to reduce overhead expenses, to reduce the long time liabilities business can grow up.

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Financial positioning for a brand of clothing. (2017, Jun 26). Retrieved December 6, 2022 , from

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