Dollar General and Dollar Tree Financial Analysis Report

University of New Brunswick

Master of Business Administration

(MBA) - 7214

Section2- Group 2

Dollar General and Dollar Tree

Financial Analysis Report

Fall 2017

Submitted to: Dr. Osama El-Temtamy

By: Sumit Gour, Bibanjot, Haroon Cole, Chen Zong

Introduction Section:

Dollar general:

Dollar General has its origins in Scottsville, Kentucky, the company Cal Turner co-founded went public as Dollar General Corporation in 1968, posting annual sales of more than $40 million and net income more than $1.5 million. In 2002, the company grew to more than 6,000 stores and $6 billion in sales. In 1997 a distribution center was established in South Boston, Virginia. By the end of 2000 sales at Dollar General exceeded $4 billion.

Relative Proportion of Short term & Long term asset for Dollar General :

                              2014                        2015           2016                    2017

It is clearly visible from the bar chart that relative proportion of STA for Dollar General varied from 29.50% in 2014 to 31.51% in 2017 where Merchandise Inventories is major contributor of current assets. Consistent decline is observed in relative proportion of LTA for Dollar General from 73.56% in 2014 to 68.49% in 2017, plant and equipment held for extended period of time contributed to long term asset.

Relative Proportion of Liabilities and Equity for Dollar General:

                                     2014           2015                   2016                     2017

Dollar Tree:

Dollar Tree, Inc. is an American chain of discount variety stores that sells items for $1 or less. Headquartered in Chesapeake, Virginia, it is a Fortune 500 company and operates 13,600 stores throughout the 48 contiguous U.S. states and Canada. The company operates one-dollar stores under the names of Dollar Tree and Dollar Bills. The company also operates a multi-price-point variety chain under Family Dollar.

On July 28, 2014, Dollar Tree announced that a deal had been reached and approved by both parties to purchase Family Dollar for $8.5 billion plus acquisition of the $1 billion in debt currently held by Family Dollar. The deal came in the month following activist investor.

Relative Proportion of Liabilities and Equity for Dollar General:

                             2014           2015                   2016                     2017

Relative Proportion of Liabilities and Equity for Dollar Tree:

                                     2014     2015                   2016          2017

Dollar general 3-year Income statement.

[pic 1]

Cash Flow

[pic 2]

Dollar tree:

Income statement:

[pic 3]

Cash flow:

[pic 4]

• 4 years balance sheet (2013, 2014, 2015, 2016)

Dollar General:

[pic 5]

Dollar tree 4-year Balance sheet:

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Dollar general. [pic 7]

• HAROON
• In accordance with the management problems at procurement department of company both Gross profit margin and Cost of goods sold figures appears below industry ranges.
• This major defect also increased company' advertisement expenses which might have been taken as long-term investment by Company management. In long run advertisement expenses  may  improve the brand market price but currently it rather gives an impact that it is to cover company stock price against insufficient  profitability.  

[pic 8]

[pic 9]

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Ratio Analysis:

Liquidity ratios:

Dollar General

Current Ratio - Current asset composition was high due to which current ratio is higher than industry standard. There is downfall in current ratio which is due to cash because company invested approximately $70 million for staff training purposes.

Quick Ratio – Deficit of liquid asset, due to low cash fall is observed in quick ratio when compared to industry standard.