Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Debt Ratios
Coverage Ratios
Dollar Tree Inc., solvency ratios
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
The solvency profile reveals a strategic reduction in long-term debt relative to equity and assets, though this trend is countered by a significant increase in liabilities associated with operating leases beginning in 2020. While traditional leverage metrics have improved, the overall solvency position is heavily influenced by lease obligations and a temporary volatility in coverage capabilities during the 2019 fiscal period.
- Debt and Capitalization Trends
- A consistent downward trend is observed in the standard debt to equity ratio, which decreased from 1.17 in 2017 to 0.44 by 2022. Similarly, the debt to capital ratio declined from 0.54 to 0.31 over the same period, indicating a systematic reduction in the reliance on borrowed funds to finance operations and growth.
- Impact of Operating Lease Liabilities
- There is a marked divergence in solvency metrics when operating lease liabilities are included. While standard debt to equity fell, the ratio including leases spiked from 0.76 in 2019 to 1.60 in 2020, eventually stabilizing at 1.29 in 2022. This pattern is mirrored in the debt to assets ratio, which rose from 0.32 in 2019 to a peak of 0.51 in 2020, suggesting that lease obligations now constitute a primary component of the company's total leverage.
- Financial Leverage and Asset Utilization
- Financial leverage exhibited fluctuations, reaching a peak of 3.13 in 2020 before moderating to 2.81 in 2022. The debt to assets ratio (excluding leases) showed a steady improvement, falling from 0.40 in 2017 to 0.16 in 2022, reflecting a stronger asset base relative to traditional debt.
- Coverage and Solvency Risk
- Interest coverage ratios demonstrated significant volatility, with a notable contraction to -2.54 in 2019, indicating a temporary inability to cover interest expenses from earnings. However, a strong recovery followed, with the ratio peaking at 12.81 in 2021 and remaining robust at 10.12 in 2022. Fixed charge coverage followed a similar trajectory, dipping to 0.26 in 2019 before returning to a stable range between 1.65 and 2.02 from 2020 through 2022.
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Debt to Equity
Dollar Tree Inc., debt to equity calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Current portion of long-term debt | —) | —) | 250,000) | —) | 915,900) | 152,100) | |
| Long-term debt, net, excluding current portion | 3,417,000) | 3,226,200) | 3,522,200) | 4,265,300) | 4,762,100) | 6,169,700) | |
| Total debt | 3,417,000) | 3,226,200) | 3,772,200) | 4,265,300) | 5,678,000) | 6,321,800) | |
| Shareholders’ equity | 7,718,500) | 7,285,300) | 6,254,800) | 5,642,900) | 7,182,300) | 5,389,500) | |
| Solvency Ratio | |||||||
| Debt to equity1 | 0.44 | 0.44 | 0.60 | 0.76 | 0.79 | 1.17 | |
| Benchmarks | |||||||
| Debt to Equity, Competitors2 | |||||||
| Costco Wholesale Corp. | 0.40 | 0.49 | — | — | — | — | |
| Target Corp. | 1.07 | 0.88 | — | — | — | — | |
| Walmart Inc. | 0.51 | 0.60 | — | — | — | — | |
| Debt to Equity, Sector | |||||||
| Consumer Staples Distribution & Retail | 0.55 | 0.62 | — | — | — | — | |
| Debt to Equity, Industry | |||||||
| Consumer Staples | 1.08 | 1.07 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 2022 Calculation
Debt to equity = Total debt ÷ Shareholders’ equity
= 3,417,000 ÷ 7,718,500 = 0.44
2 Click competitor name to see calculations.
The financial position of the organization demonstrates a consistent trend toward deleveraging and improved solvency between January 2017 and January 2022. The overall capital structure has shifted from a reliance on borrowed funds toward a significantly stronger equity base, reducing the organization's financial risk profile.
- Total Debt Trends
- A sustained reduction in total debt is evident from 2017 through 2021, during which liabilities decreased from 6,321,800 thousand US dollars to 3,226,200 thousand US dollars. While a marginal increase to 3,417,000 thousand US dollars was recorded in January 2022, the total debt remains substantially lower than the levels observed at the beginning of the analyzed period.
- Shareholders' Equity Growth
- Equity experienced an overall upward trajectory, increasing from 5,389,500 thousand US dollars in 2017 to 7,718,500 thousand US dollars in 2022. Despite a temporary contraction in February 2019, the subsequent periods showed consistent growth, enhancing the company's internal funding capacity and asset backing.
- Debt to Equity Ratio Analysis
- The debt to equity ratio exhibits a sharp and continuous decline, falling from 1.17 in 2017 to 0.44 in 2022. This progression reflects a systematic transition in the financing mix, moving from a position where debt exceeded equity to one where equity is more than double the total debt. The ratio stabilized at 0.44 between January 2021 and January 2022, indicating a plateau in the deleveraging process.
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Debt to Equity (including Operating Lease Liability)
Dollar Tree Inc., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Current portion of long-term debt | —) | —) | 250,000) | —) | 915,900) | 152,100) | |
| Long-term debt, net, excluding current portion | 3,417,000) | 3,226,200) | 3,522,200) | 4,265,300) | 4,762,100) | 6,169,700) | |
| Total debt | 3,417,000) | 3,226,200) | 3,772,200) | 4,265,300) | 5,678,000) | 6,321,800) | |
| Current portion of operating lease liabilities | 1,407,800) | 1,348,200) | 1,279,300) | —) | —) | —) | |
| Operating lease liabilities, long-term | 5,145,500) | 5,065,500) | 4,979,500) | —) | —) | —) | |
| Total debt (including operating lease liability) | 9,970,300) | 9,639,900) | 10,031,000) | 4,265,300) | 5,678,000) | 6,321,800) | |
| Shareholders’ equity | 7,718,500) | 7,285,300) | 6,254,800) | 5,642,900) | 7,182,300) | 5,389,500) | |
| Solvency Ratio | |||||||
| Debt to equity (including operating lease liability)1 | 1.29 | 1.32 | 1.60 | 0.76 | 0.79 | 1.17 | |
| Benchmarks | |||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | |||||||
| Costco Wholesale Corp. | 0.53 | 0.65 | — | — | — | — | |
| Target Corp. | 1.28 | 1.05 | — | — | — | — | |
| Walmart Inc. | 0.69 | 0.78 | — | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | |||||||
| Consumer Staples Distribution & Retail | 0.73 | 0.79 | — | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | |||||||
| Consumer Staples | 1.20 | 1.19 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 2022 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Shareholders’ equity
= 9,970,300 ÷ 7,718,500 = 1.29
2 Click competitor name to see calculations.
The solvency profile exhibits significant volatility over the analyzed six-year period, characterized by a substantial increase in leverage beginning in 2020 followed by a phase of relative stabilization.
- Total Debt Obligations
- A period of debt reduction occurred between 2017 and 2019, with total debt, including operating lease liabilities, decreasing from $6.32 billion to $4.27 billion. This trend reversed sharply in 2020, when debt obligations more than doubled to reach $10.03 billion. Following this spike, the debt level remained elevated and relatively stable, ending the period at $9.97 billion in 2022.
- Shareholders' Equity Trends
- Equity showed an overall upward trajectory, rising from $5.39 billion in 2017 to $7.72 billion in 2022. Although a temporary decline was recorded in 2019, shareholders' equity grew consistently from 2020 onward, indicating a steady increase in the company's net asset base.
- Debt to Equity Ratio Analysis
- The debt to equity ratio mirrored the fluctuations in total debt, starting at 1.17 and declining to a low of 0.76 by 2019. A significant increase in leverage was observed in 2020, with the ratio peaking at 1.60. In the subsequent two years, a gradual downward trend emerged, with the ratio moderating to 1.32 in 2021 and 1.29 in 2022, suggesting a slight improvement in the balance between liabilities and equity.
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Debt to Capital
Dollar Tree Inc., debt to capital calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Current portion of long-term debt | —) | —) | 250,000) | —) | 915,900) | 152,100) | |
| Long-term debt, net, excluding current portion | 3,417,000) | 3,226,200) | 3,522,200) | 4,265,300) | 4,762,100) | 6,169,700) | |
| Total debt | 3,417,000) | 3,226,200) | 3,772,200) | 4,265,300) | 5,678,000) | 6,321,800) | |
| Shareholders’ equity | 7,718,500) | 7,285,300) | 6,254,800) | 5,642,900) | 7,182,300) | 5,389,500) | |
| Total capital | 11,135,500) | 10,511,500) | 10,027,000) | 9,908,200) | 12,860,300) | 11,711,300) | |
| Solvency Ratio | |||||||
| Debt to capital1 | 0.31 | 0.31 | 0.38 | 0.43 | 0.44 | 0.54 | |
| Benchmarks | |||||||
| Debt to Capital, Competitors2 | |||||||
| Costco Wholesale Corp. | 0.28 | 0.33 | — | — | — | — | |
| Target Corp. | 0.52 | 0.47 | — | — | — | — | |
| Walmart Inc. | 0.34 | 0.38 | — | — | — | — | |
| Debt to Capital, Sector | |||||||
| Consumer Staples Distribution & Retail | 0.36 | 0.38 | — | — | — | — | |
| Debt to Capital, Industry | |||||||
| Consumer Staples | 0.52 | 0.52 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 2022 Calculation
Debt to capital = Total debt ÷ Total capital
= 3,417,000 ÷ 11,135,500 = 0.31
2 Click competitor name to see calculations.
The financial trajectory from 2017 to 2022 indicates a consistent strategy of deleveraging, resulting in a strengthened solvency position. A systematic reduction in total debt, combined with a stabilizing capital base, has led to a significant decrease in the company's reliance on borrowed funds to finance its operations.
- Total Debt Trends
- A sustained downward trend in total debt was observed between January 2017 and January 2021, with obligations decreasing from 6,321,800 thousand US dollars to 3,226,200 thousand US dollars. This period of debt reduction was followed by a marginal increase to 3,417,000 thousand US dollars by January 2022.
- Total Capital Fluctuations
- Total capital exhibited moderate volatility, peaking at 12,860,300 thousand US dollars in February 2018 before experiencing a contraction to 9,908,200 thousand US dollars in February 2019. Following this dip, total capital grew steadily over the subsequent three years, reaching 11,135,500 thousand US dollars by January 2022.
- Debt to Capital Ratio Analysis
- The debt to capital ratio declined consistently throughout the analyzed period, falling from 0.54 in 2017 to 0.31 in 2021. This ratio remained stable at 0.31 in 2022, representing a substantial reduction in financial leverage and indicating a shift toward a more conservative capital structure.
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Debt to Capital (including Operating Lease Liability)
Dollar Tree Inc., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Current portion of long-term debt | —) | —) | 250,000) | —) | 915,900) | 152,100) | |
| Long-term debt, net, excluding current portion | 3,417,000) | 3,226,200) | 3,522,200) | 4,265,300) | 4,762,100) | 6,169,700) | |
| Total debt | 3,417,000) | 3,226,200) | 3,772,200) | 4,265,300) | 5,678,000) | 6,321,800) | |
| Current portion of operating lease liabilities | 1,407,800) | 1,348,200) | 1,279,300) | —) | —) | —) | |
| Operating lease liabilities, long-term | 5,145,500) | 5,065,500) | 4,979,500) | —) | —) | —) | |
| Total debt (including operating lease liability) | 9,970,300) | 9,639,900) | 10,031,000) | 4,265,300) | 5,678,000) | 6,321,800) | |
| Shareholders’ equity | 7,718,500) | 7,285,300) | 6,254,800) | 5,642,900) | 7,182,300) | 5,389,500) | |
| Total capital (including operating lease liability) | 17,688,800) | 16,925,200) | 16,285,800) | 9,908,200) | 12,860,300) | 11,711,300) | |
| Solvency Ratio | |||||||
| Debt to capital (including operating lease liability)1 | 0.56 | 0.57 | 0.62 | 0.43 | 0.44 | 0.54 | |
| Benchmarks | |||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | |||||||
| Costco Wholesale Corp. | 0.35 | 0.39 | — | — | — | — | |
| Target Corp. | 0.56 | 0.51 | — | — | — | — | |
| Walmart Inc. | 0.41 | 0.44 | — | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | |||||||
| Consumer Staples Distribution & Retail | 0.42 | 0.44 | — | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | |||||||
| Consumer Staples | 0.54 | 0.54 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 2022 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 9,970,300 ÷ 17,688,800 = 0.56
2 Click competitor name to see calculations.
The solvency profile from 2017 to 2022 is characterized by an initial period of deleveraging followed by a significant increase in liabilities and a subsequent phase of stabilization. The debt to capital ratio, which incorporates operating lease liabilities, reflects these shifts in the company's financing structure and capital base.
- Debt to Capital Ratio Trends
- A downward trend in the debt to capital ratio is observed between January 2017 and February 2019, with the ratio declining from 0.54 to 0.43. This indicates a period where the company reduced its reliance on debt relative to its total capital. However, a sharp reversal occurred by February 2020, where the ratio spiked to 0.62, marking the highest leverage level in the period analyzed. From 2020 to 2022, a gradual moderation is evident, as the ratio decreased to 0.56 by January 2022.
- Analysis of Total Debt and Capital Volumes
- Total debt, including operating lease liabilities, decreased from approximately 6.32 billion in 2017 to a low of 4.27 billion in 2019. A substantial increase followed in 2020, with total debt rising to 10.03 billion, more than doubling the previous year's balance. In the final two years of the period, debt levels remained relatively stagnant, fluctuating between 9.64 billion and 9.97 billion. Concurrently, total capital grew from 11.71 billion in 2017 to 17.69 billion in 2022. The growth in the total capital base after 2020 contributed to the gradual reduction of the debt to capital ratio despite the high absolute level of debt.
- Solvency Implications
- The data indicates a structural shift in the capital composition occurring around 2020. While the company ended the period with a higher debt load than it began with in 2017, the expansion of total capital suggests an increase in the overall financial scale. The stabilization of the ratio at 0.56 indicates a balanced approach to financing in the latter years, although the solvency position remains more leveraged than it was during the 2018-2019 period.
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Debt to Assets
Dollar Tree Inc., debt to assets calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Current portion of long-term debt | —) | —) | 250,000) | —) | 915,900) | 152,100) | |
| Long-term debt, net, excluding current portion | 3,417,000) | 3,226,200) | 3,522,200) | 4,265,300) | 4,762,100) | 6,169,700) | |
| Total debt | 3,417,000) | 3,226,200) | 3,772,200) | 4,265,300) | 5,678,000) | 6,321,800) | |
| Total assets | 21,721,800) | 20,696,000) | 19,574,600) | 13,501,200) | 16,332,800) | 15,701,600) | |
| Solvency Ratio | |||||||
| Debt to assets1 | 0.16 | 0.16 | 0.19 | 0.32 | 0.35 | 0.40 | |
| Benchmarks | |||||||
| Debt to Assets, Competitors2 | |||||||
| Costco Wholesale Corp. | 0.13 | 0.14 | — | — | — | — | |
| Target Corp. | 0.25 | 0.25 | — | — | — | — | |
| Walmart Inc. | 0.17 | 0.19 | — | — | — | — | |
| Debt to Assets, Sector | |||||||
| Consumer Staples Distribution & Retail | 0.18 | 0.19 | — | — | — | — | |
| Debt to Assets, Industry | |||||||
| Consumer Staples | 0.30 | 0.30 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 2022 Calculation
Debt to assets = Total debt ÷ Total assets
= 3,417,000 ÷ 21,721,800 = 0.16
2 Click competitor name to see calculations.
The solvency profile exhibits a consistent trend toward deleveraging over the analyzed six-year period. A significant reduction in the reliance on borrowed capital relative to total assets is evident, indicating a strengthened balance sheet and a reduction in financial risk.
- Total Debt Trends
- Total debt experienced a sustained decline from January 28, 2017, through January 30, 2021, falling from US$ 6.32 billion to US$ 3.23 billion. Although a slight increase to US$ 3.42 billion was recorded by January 29, 2022, the absolute debt level remains approximately 46% lower than the 2017 baseline.
- Asset Base Evolution
- Total assets demonstrated an overall upward trajectory, growing from US$ 15.70 billion in 2017 to US$ 21.72 billion in 2022. While a contraction to US$ 13.50 billion occurred in 2019, a period of rapid expansion followed between 2020 and 2022, significantly increasing the asset base used to support the company's obligations.
- Debt to Assets Ratio Analysis
- The debt to assets ratio shows a steady and marked decline, moving from 0.40 in 2017 to a stable 0.16 in 2021 and 2022. The most pronounced shift occurred between 2019 and 2020, where the ratio dropped from 0.32 to 0.19. This trajectory reflects a strategic improvement in solvency, as the company has successfully lowered the proportion of its assets financed through debt.
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Debt to Assets (including Operating Lease Liability)
Dollar Tree Inc., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Current portion of long-term debt | —) | —) | 250,000) | —) | 915,900) | 152,100) | |
| Long-term debt, net, excluding current portion | 3,417,000) | 3,226,200) | 3,522,200) | 4,265,300) | 4,762,100) | 6,169,700) | |
| Total debt | 3,417,000) | 3,226,200) | 3,772,200) | 4,265,300) | 5,678,000) | 6,321,800) | |
| Current portion of operating lease liabilities | 1,407,800) | 1,348,200) | 1,279,300) | —) | —) | —) | |
| Operating lease liabilities, long-term | 5,145,500) | 5,065,500) | 4,979,500) | —) | —) | —) | |
| Total debt (including operating lease liability) | 9,970,300) | 9,639,900) | 10,031,000) | 4,265,300) | 5,678,000) | 6,321,800) | |
| Total assets | 21,721,800) | 20,696,000) | 19,574,600) | 13,501,200) | 16,332,800) | 15,701,600) | |
| Solvency Ratio | |||||||
| Debt to assets (including operating lease liability)1 | 0.46 | 0.47 | 0.51 | 0.32 | 0.35 | 0.40 | |
| Benchmarks | |||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | |||||||
| Costco Wholesale Corp. | 0.17 | 0.19 | — | — | — | — | |
| Target Corp. | 0.31 | 0.29 | — | — | — | — | |
| Walmart Inc. | 0.23 | 0.25 | — | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | |||||||
| Consumer Staples Distribution & Retail | 0.23 | 0.25 | — | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | |||||||
| Consumer Staples | 0.33 | 0.33 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 2022 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 9,970,300 ÷ 21,721,800 = 0.46
2 Click competitor name to see calculations.
The solvency profile of Dollar Tree Inc. exhibited significant volatility between 2017 and 2022, characterized by an initial period of deleveraging followed by a substantial increase in debt obligations and subsequent stabilization.
- Debt to Assets Ratio Trends
- Between January 2017 and February 2019, a consistent downward trend in the debt to assets ratio was observed, decreasing from 0.40 to a period low of 0.32. This improvement was primarily driven by a reduction in total debt, which fell from approximately 6.32 billion US dollars to 4.27 billion US dollars. This phase indicates a period of strengthening solvency and reduced reliance on external financing relative to the asset base.
- Structural Shift in 2020
- A sharp inflection occurred in February 2020, where the debt to assets ratio surged to 0.51. This spike coincided with a dramatic increase in total debt, which rose to 10.03 billion US dollars. Although total assets also grew significantly during this period to 19.57 billion US dollars, the magnitude of the debt increase outweighed the asset growth, resulting in a higher proportion of assets being financed through debt and operating lease liabilities.
- Recent Stabilization
- From 2021 to 2022, the debt to assets ratio showed signs of stabilization, trending slightly downward from 0.47 to 0.46. This marginal improvement was supported by a steady expansion of the asset base, which grew to 21.72 billion US dollars by January 2022, while total debt remained relatively constant at approximately 9.97 billion US dollars. This suggests a transition toward a more stable, albeit higher, leverage equilibrium compared to the 2017-2019 period.
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Financial Leverage
Dollar Tree Inc., financial leverage calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Total assets | 21,721,800) | 20,696,000) | 19,574,600) | 13,501,200) | 16,332,800) | 15,701,600) | |
| Shareholders’ equity | 7,718,500) | 7,285,300) | 6,254,800) | 5,642,900) | 7,182,300) | 5,389,500) | |
| Solvency Ratio | |||||||
| Financial leverage1 | 2.81 | 2.84 | 3.13 | 2.39 | 2.27 | 2.91 | |
| Benchmarks | |||||||
| Financial Leverage, Competitors2 | |||||||
| Costco Wholesale Corp. | 3.11 | 3.37 | — | — | — | — | |
| Target Corp. | 4.20 | 3.55 | — | — | — | — | |
| Walmart Inc. | 2.94 | 3.12 | — | — | — | — | |
| Financial Leverage, Sector | |||||||
| Consumer Staples Distribution & Retail | 3.11 | 3.21 | — | — | — | — | |
| Financial Leverage, Industry | |||||||
| Consumer Staples | 3.59 | 3.59 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 2022 Calculation
Financial leverage = Total assets ÷ Shareholders’ equity
= 21,721,800 ÷ 7,718,500 = 2.81
2 Click competitor name to see calculations.
The overall trajectory of the company's solvency position reflects a general expansion of the balance sheet, characterized by a substantial increase in total assets and a steady recovery in shareholders' equity over the six-year period ending January 29, 2022.
- Total Asset Dynamics
- Total assets exhibited a non-linear growth pattern, increasing from \$15.7 billion in 2017 to \$21.7 billion in 2022. A notable contraction occurred in 2019, where assets declined to \$13.5 billion, followed by a sharp expansion in 2020, when assets surged to \$19.6 billion. This subsequent growth continued through 2022, marking a significant increase in the organization's total resource base.
- Shareholders' Equity Evolution
- Equity grew from \$5.4 billion in 2017 to \$7.7 billion in 2022. Similar to the asset trend, a decline was observed in 2019, with equity dropping to \$5.6 billion. However, the period from 2020 to 2022 was characterized by consistent annual growth, suggesting an increase in retained earnings or additional capital infusions that strengthened the equity cushion.
- Financial Leverage Analysis
- The financial leverage ratio demonstrated volatility, fluctuating between a low of 2.27 in 2018 and a high of 3.13 in 2020. The spike observed in 2020 indicates a period of increased financial risk or a strategic decision to fund asset growth through higher liabilities relative to equity. Following this peak, the ratio moderated to 2.84 in 2021 and 2.81 in 2022, signaling a gradual return toward a more stable leverage profile.
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Interest Coverage
Dollar Tree Inc., interest coverage calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net income (loss) | 1,327,900) | 1,341,900) | 827,000) | (1,590,800) | 1,714,300) | 896,200) | |
| Add: Income tax expense | 304,300) | 397,900) | 271,700) | 281,800) | (10,300) | 433,200) | |
| Add: Interest expense, net | 178,900) | 147,300) | 162,100) | 370,000) | 301,800) | 375,500) | |
| Earnings before interest and tax (EBIT) | 1,811,100) | 1,887,100) | 1,260,800) | (939,000) | 2,005,800) | 1,704,900) | |
| Solvency Ratio | |||||||
| Interest coverage1 | 10.12 | 12.81 | 7.78 | -2.54 | 6.65 | 4.54 | |
| Benchmarks | |||||||
| Interest Coverage, Competitors2 | |||||||
| Costco Wholesale Corp. | 50.62 | 40.06 | — | — | — | — | |
| Target Corp. | 22.16 | 6.68 | — | — | — | — | |
| Walmart Inc. | 10.38 | 9.88 | — | — | — | — | |
| Interest Coverage, Sector | |||||||
| Consumer Staples Distribution & Retail | 14.77 | 10.47 | — | — | — | — | |
| Interest Coverage, Industry | |||||||
| Consumer Staples | 15.69 | 11.46 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 2022 Calculation
Interest coverage = EBIT ÷ Interest expense
= 1,811,100 ÷ 178,900 = 10.12
2 Click competitor name to see calculations.
The analysis of solvency metrics from 2017 to 2022 reveals a period of significant volatility followed by a substantial strengthening of the capacity to service debt. While a critical decline occurred in 2019, subsequent years demonstrate a robust recovery in operating profitability and a reduction in relative interest burdens.
- Earnings Before Interest and Tax (EBIT)
- Operating earnings exhibited a non-linear trend, starting at 1,704,900 thousand USD in 2017 and peaking at 2,005,800 thousand USD in 2018. A sharp reversal occurred in 2019, with EBIT falling to a negative 939,000 thousand USD. However, a strong recovery was initiated in 2020, with earnings returning to 1,260,800 thousand USD and reaching a secondary peak of 1,887,100 thousand USD in 2021, before settling at 1,811,100 thousand USD in 2022.
- Net Interest Expense
- Interest obligations remained relatively high between 2017 and 2019, fluctuating between 301,800 thousand USD and 375,500 thousand USD. A notable reduction in interest expenses was observed starting in 2020, where costs dropped to 162,100 thousand USD and reached a low of 147,300 thousand USD in 2021. A slight increase to 178,900 thousand USD occurred in 2022, though levels remained significantly lower than those observed in the early part of the period.
- Interest Coverage Ratio
- The interest coverage ratio highlights a period of acute financial stress in 2019, where the ratio dropped to -2.54, indicating an inability to cover interest payments from operating profits. Prior to this, the ratio had improved from 4.54 in 2017 to 6.65 in 2018. Post-2019, a rapid improvement in solvency is evident, with the ratio climbing to 7.78 in 2020 and peaking at 12.81 in 2021. The ratio ended the period at 10.12 in 2022, suggesting a matured and stable ability to meet interest obligations compared to the 2017 baseline.
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Fixed Charge Coverage
Dollar Tree Inc., fixed charge coverage calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net income (loss) | 1,327,900) | 1,341,900) | 827,000) | (1,590,800) | 1,714,300) | 896,200) | |
| Add: Income tax expense | 304,300) | 397,900) | 271,700) | 281,800) | (10,300) | 433,200) | |
| Add: Interest expense, net | 178,900) | 147,300) | 162,100) | 370,000) | 301,800) | 375,500) | |
| Earnings before interest and tax (EBIT) | 1,811,100) | 1,887,100) | 1,260,800) | (939,000) | 2,005,800) | 1,704,900) | |
| Add: Operating lease cost | 1,602,800) | 1,551,200) | 1,520,500) | 1,404,000) | 1,343,500) | 1,276,600) | |
| Earnings before fixed charges and tax | 3,413,900) | 3,438,300) | 2,781,300) | 465,000) | 3,349,300) | 2,981,500) | |
| Interest expense, net | 178,900) | 147,300) | 162,100) | 370,000) | 301,800) | 375,500) | |
| Operating lease cost | 1,602,800) | 1,551,200) | 1,520,500) | 1,404,000) | 1,343,500) | 1,276,600) | |
| Fixed charges | 1,781,700) | 1,698,500) | 1,682,600) | 1,774,000) | 1,645,300) | 1,652,100) | |
| Solvency Ratio | |||||||
| Fixed charge coverage1 | 1.92 | 2.02 | 1.65 | 0.26 | 2.04 | 1.80 | |
| Benchmarks | |||||||
| Fixed Charge Coverage, Competitors2 | |||||||
| Costco Wholesale Corp. | 18.23 | 15.30 | — | — | — | — | |
| Target Corp. | 12.02 | 5.24 | — | — | — | — | |
| Walmart Inc. | 5.38 | 5.16 | — | — | — | — | |
| Fixed Charge Coverage, Sector | |||||||
| Consumer Staples Distribution & Retail | 7.41 | 5.88 | — | — | — | — | |
| Fixed Charge Coverage, Industry | |||||||
| Consumer Staples | 9.12 | 7.50 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 2022 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 3,413,900 ÷ 1,781,700 = 1.92
2 Click competitor name to see calculations.
The fixed charge coverage analysis reveals a period of general stability interrupted by a significant volatility event in the 2019 fiscal year. While fixed charges remained relatively constant throughout the six-year period, earnings before fixed charges and tax experienced a drastic fluctuation that temporarily compromised the solvency position.
- Earnings Before Fixed Charges and Tax Trends
- Earnings exhibited a growth trajectory from 2017 to 2018, rising from 2.98 billion to 3.35 billion. A severe contraction occurred in 2019, where earnings plummeted to 465 million. However, a strong recovery followed, with earnings rebounding to 2.78 billion in 2020 and peaking at 3.44 billion in 2021, before stabilizing at 3.41 billion in 2022.
- Fixed Charges Stability
- Fixed obligations demonstrated low volatility over the analyzed timeframe. These charges fluctuated within a narrow range, starting at 1.65 billion in 2017 and ending at 1.78 billion in 2022. The consistency of these charges suggests a stable debt structure or lease obligation profile.
- Fixed Charge Coverage Ratio Analysis
- The coverage ratio remained healthy between 1.80 and 2.04 for most of the period, indicating a sufficient margin to meet fixed obligations. A critical decline to 0.26 was observed in 2019, signifying that earnings were insufficient to cover fixed charges during that fiscal year. Subsequent years saw a return to normalization, with the ratio recovering to 1.65 in 2020 and maintaining a range between 1.92 and 2.02 through 2022.
In summary, the solvency profile is characterized by a resilient recovery following a sharp earnings decline in 2019. The current trajectory indicates a stabilized capacity to service fixed charges, with the coverage ratio returning to historical norms near 2.0.
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