Dollar Tree and Dollar General: Horizontal and Vertical Analysis

Only available on StudyMode
  • Download(s) : 84
  • Published : May 17, 2013
Open Document
Text Preview
Course Project Final
Dollar Tree and Dollar General
Horizontal and Vertical Analysis

Cynthia Bates
Devry University
Finance 382
Professor Bankston-Bradshaw
April 19, 2013

Course Project Final
Dollar Tree and Dollar General
Vertical and Horizontal Analysis

I. General information about companies
II. Current events
III. Relevant ratios
IV. Spreadsheets
V. Significant assets and liability items, comments on revenue and profitability VI. Relevant ratios and vertical analysis discussion
VII. Brief analysis of horizontal analysis
VIII. Company objectives
IX. Three most important ratios
X. Industry comparison
XI. References

I. General information about the companies
For my course project I chose to compare Dollar Tree and Dollar General. Both of these companies are in the retail industry. These companies sell similar items. Both of these companies are very competitive in the industry they operate in. Let us begin by looking at the Dollar Tree. The Dollar Tree started as a variety store under a different name in 1954 (, 2013). This was a family business and was interested in offering products for less money than other retail stores were able to. This brought in huge profits for such a small “mom and pop” business. In recent years the name has changed a few times until in 1990 the store name was changed to Dollar Tree. It has been the same since that time. Dollar General began during the Great Depression. J.L Turner and his son were buying retail stores that were hard hit by the depression (, 2013). The first store was named J.L Turner and Son Wholesale. The idea was that nothing in the store would cost more than a dollar. This idea spread like wildfire. Dollar General Corporation was formed in 1968. It has grown tremendously since that time. II. Current events

Dollar Tree seems to be having a good year in 2013. They have reported earnings in excess of 7 billion dollars (, 2013). This amount has grown over the last few years. It seems that Dollar Tree is also cutting administrative and general costs in order to save money. This has led to a bottom line growth from $488.3 million to $619.3 million. This seems to be a good indication of how this company is going to fare in the next year. Dollar General has had growth in the past year as well. They have opened up new stores while not making any significant store closings (, 2013). They had revenues for 2012 that amounted to $16 billion. This is significantly less than Dollar Tree. The Dollar General has stepped out into a new field for them as well. They are now experiencing the supermarket field. This has led to more debt. The current amount of debt that is carried on the balance sheet for 2013 is $2, 167, 300. While this is a lot of debt, their debt ratio is still looking good. III. Relevant ratios

The following chart shows the ratios that I feel are important to these businesses. Ratio| Dollar General| Dollar Tree|
Days Sales Outstanding| 0| |
Days Inventory| 73.53| 7.78|
Payables Period| 38.81| 24.37|
Inventory Turnover| 4.96| 5.16|
Fixed AssetTurnover| 8.25| 8.28|
Asset Turnover| 1.60| 2.91| (2013)

I chose these ratios because I think they are especially important in the retail industry. I think that these ratios could be used to evaluate any industry, but they are especially useful in the retail industry. While looking at these ratios it looks as if these two companies are very close in every aspect except for the days in inventory. This can be crucial in the retail industry. The longer merchandise sits on the shelf, the harder it is to make money on it. IV. Spreadsheets

I have completed the spreadsheets for both companies. I have added an icon that can be clicked on to display the information on both companies.
V. Significant assets and liability items, comments on revenue...
tracking img