Analysis of Long-term (Investment) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Long-term Activity Ratios (Summary)
Dollar Tree Inc., long-term (investment) activity 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).
An analysis of the long-term activity ratios reveals a general decline in asset utilization efficiency between 2017 and 2022, characterized by a significant structural shift in asset reporting beginning in 2020.
- Net Fixed Asset Turnover
- The standard net fixed asset turnover ratio peaked in 2018 at 6.95 before entering a gradual decline to 5.88 by 2022. A more pronounced shift is observed in the turnover ratio including operating lease right-of-use assets, which dropped sharply from 6.62 in 2019 to 2.34 in 2020. This precipitous decrease suggests a substantial expansion of the asset base through the capitalization of leases, which significantly lowered the turnover efficiency relative to the expanded asset denominator.
- Total Asset Turnover
- Total asset turnover demonstrated volatility, reaching a peak of 1.69 in 2019 before declining to 1.21 in 2020. Following this drop, the ratio remained nearly stagnant, fluctuating slightly between 1.21 and 1.23 through 2022. This indicates that the growth in total assets has outpaced the growth in revenue generated from those assets since 2019.
- Equity Turnover
- Equity turnover exhibited fluctuations over the period, with a peak of 4.04 in 2019. Subsequent years showed a consistent downward trend, ending at 3.41 in 2022. This suggests a diminishing ability to generate sales relative to the shareholders' equity invested in the business over the latter half of the analyzed timeframe.
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Net Fixed Asset Turnover
Dollar Tree Inc., net fixed asset turnover 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 sales | 26,309,800) | 25,508,400) | 23,610,800) | 22,823,300) | 22,245,500) | 20,719,200) | |
| Property, plant and equipment, net of accumulated depreciation | 4,477,300) | 4,116,300) | 3,881,800) | 3,445,300) | 3,200,700) | 3,115,800) | |
| Long-term Activity Ratio | |||||||
| Net fixed asset turnover1 | 5.88 | 6.20 | 6.08 | 6.62 | 6.95 | 6.65 | |
| Benchmarks | |||||||
| Net Fixed Asset Turnover, Competitors2 | |||||||
| Costco Wholesale Corp. | 8.48 | 7.84 | — | — | — | — | |
| Target Corp. | 3.76 | 3.48 | — | — | — | — | |
| Walmart Inc. | 5.74 | 5.77 | — | — | — | — | |
| Net Fixed Asset Turnover, Sector | |||||||
| Consumer Staples Distribution & Retail | 5.85 | 5.70 | — | — | — | — | |
| Net Fixed Asset Turnover, Industry | |||||||
| Consumer Staples | 5.21 | 5.06 | — | — | — | — | |
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
Net fixed asset turnover = Net sales ÷ Property, plant and equipment, net of accumulated depreciation
= 26,309,800 ÷ 4,477,300 = 5.88
2 Click competitor name to see calculations.
Between January 2017 and January 2022, a consistent expansion in both net sales and net property, plant, and equipment is observed. Net sales grew from approximately $20.7 billion to $26.3 billion, while net fixed assets increased from $3.1 billion to $4.5 billion during the same period.
- Net Fixed Asset Turnover Trend
- The net fixed asset turnover ratio reached a peak of 6.95 in February 2018, marking the highest level of efficiency in generating revenue from fixed assets within the analyzed timeframe. Following this peak, a general downward trajectory is evident, with the ratio declining to 5.88 by January 2022.
- Asset Utilization Efficiency
- The decline in the turnover ratio indicates that the expansion of net property, plant, and equipment has outpaced the growth in net sales. While sales increased by approximately 27% over the period, net fixed assets grew by approximately 43%, resulting in a lower volume of sales generated per dollar of fixed asset investment.
- Operational Analysis of Recent Cycles
- A brief period of stabilization is noted in January 2021, where the ratio rose slightly to 6.20 from a 2020 low of 6.08. However, this recovery was not sustained, and the ratio reached its lowest point in the series by January 2022, suggesting a continuing trend of diminishing returns on long-term asset investments.
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Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
Dollar Tree Inc., net fixed asset turnover (including operating lease, right-of-use asset) calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net sales | 26,309,800) | 25,508,400) | 23,610,800) | 22,823,300) | 22,245,500) | 20,719,200) | |
| Property, plant and equipment, net of accumulated depreciation | 4,477,300) | 4,116,300) | 3,881,800) | 3,445,300) | 3,200,700) | 3,115,800) | |
| Operating lease right-of-use assets | 6,425,300) | 6,324,100) | 6,225,000) | —) | —) | —) | |
| Property, plant and equipment, net of accumulated depreciation (including operating lease, right-of-use asset) | 10,902,600) | 10,440,400) | 10,106,800) | 3,445,300) | 3,200,700) | 3,115,800) | |
| Long-term Activity Ratio | |||||||
| Net fixed asset turnover (including operating lease, right-of-use asset)1 | 2.41 | 2.44 | 2.34 | 6.62 | 6.95 | 6.65 | |
| Benchmarks | |||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Competitors2 | |||||||
| Costco Wholesale Corp. | 7.67 | 7.01 | — | — | — | — | |
| Target Corp. | 3.45 | 3.21 | — | — | — | — | |
| Walmart Inc. | 5.04 | 5.05 | — | — | — | — | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Sector | |||||||
| Consumer Staples Distribution & Retail | 5.20 | 5.06 | — | — | — | — | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Industry | |||||||
| Consumer Staples | 4.69 | 4.55 | — | — | — | — | |
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
Net fixed asset turnover (including operating lease, right-of-use asset) = Net sales ÷ Property, plant and equipment, net of accumulated depreciation (including operating lease, right-of-use asset)
= 26,309,800 ÷ 10,902,600 = 2.41
2 Click competitor name to see calculations.
A comprehensive analysis of long-term activity ratios reveals a significant structural shift in asset utilization and reporting between 2017 and 2022. While top-line revenue demonstrated consistent growth, the reported asset base experienced a substantial increase that fundamentally altered the net fixed asset turnover ratio.
- Revenue Growth Trends
- Net sales exhibited a steady upward trajectory throughout the period, increasing from \$20.72 billion in 2017 to \$26.31 billion in 2022. This represents a consistent expansion in sales volume over the six-year duration.
- Fixed Asset Base Expansion
- The value of net property, plant, and equipment, including right-of-use assets, remained relatively stable from 2017 to 2019, ranging between \$3.12 billion and \$3.45 billion. A sharp increase occurred in 2020, where the asset balance rose to \$10.11 billion, eventually reaching \$10.90 billion by 2022. This abrupt increase suggests a change in accounting treatment or a significant expansion in leased assets brought onto the balance sheet.
- Net Fixed Asset Turnover Analysis
- The net fixed asset turnover ratio remained high and stable from 2017 to 2019, with values ranging from 6.62 to 6.95. However, a significant contraction is observed in 2020, where the ratio dropped to 2.34. This decline is directly correlated with the disproportionate increase in the asset base relative to the growth in net sales. From 2020 through 2022, the ratio stabilized at a lower level, fluctuating slightly between 2.34 and 2.44.
In summary, the observed decline in the net fixed asset turnover ratio does not reflect a decrease in operational efficiency, but rather a substantial increase in the denominator due to the inclusion of operating lease right-of-use assets. The stabilization of the ratio from 2020 to 2022 indicates a new baseline for asset productivity following the asset base adjustment.
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Total Asset Turnover
Dollar Tree Inc., total asset turnover 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 sales | 26,309,800) | 25,508,400) | 23,610,800) | 22,823,300) | 22,245,500) | 20,719,200) | |
| Total assets | 21,721,800) | 20,696,000) | 19,574,600) | 13,501,200) | 16,332,800) | 15,701,600) | |
| Long-term Activity Ratio | |||||||
| Total asset turnover1 | 1.21 | 1.23 | 1.21 | 1.69 | 1.36 | 1.32 | |
| Benchmarks | |||||||
| Total Asset Turnover, Competitors2 | |||||||
| Costco Wholesale Corp. | 3.47 | 3.24 | — | — | — | — | |
| Target Corp. | 1.97 | 1.83 | — | — | — | — | |
| Walmart Inc. | 2.32 | 2.20 | — | — | — | — | |
| Total Asset Turnover, Sector | |||||||
| Consumer Staples Distribution & Retail | 2.47 | 2.32 | — | — | — | — | |
| Total Asset Turnover, Industry | |||||||
| Consumer Staples | 1.47 | 1.41 | — | — | — | — | |
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
Total asset turnover = Net sales ÷ Total assets
= 26,309,800 ÷ 21,721,800 = 1.21
2 Click competitor name to see calculations.
Net sales exhibited a consistent upward trajectory throughout the analyzed period, increasing from 20.7 billion US dollars in January 2017 to 26.3 billion US dollars by January 2022. Despite this steady growth in revenue, the efficiency of asset utilization remained volatile, characterized by a significant peak followed by a period of stabilization.
- Total Asset Turnover Volatility
- The asset turnover ratio rose slightly from 1.32 in 2017 to 1.36 in 2018, before reaching a peak of 1.69 in February 2019. This peak was primarily driven by a sharp contraction in total assets, which fell to 13.5 billion US dollars, while sales continued to grow. This suggests a period of high capital efficiency where revenue was generated from a significantly leaner asset base.
- Impact of Asset Expansion
- A substantial decline in the turnover ratio is observed in February 2020, dropping to 1.21. This shift corresponds with a rapid expansion of total assets, which surged to 19.6 billion US dollars. The ratio remained relatively flat over the subsequent two years, ending at 1.21 in January 2022, indicating that the growth in the asset base largely offset the increases in net sales.
- Long-term Asset Efficiency Trend
- Over the six-year horizon, total assets grew by approximately 38%, while net sales grew by approximately 27%. Because asset accumulation outpaced revenue growth, the total asset turnover ratio concluded the period lower than its 2017 starting point. This pattern indicates a transition from a phase of asset optimization in 2019 to a phase of aggressive asset investment and capacity expansion from 2020 onward.
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Equity Turnover
Dollar Tree Inc., equity turnover 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 sales | 26,309,800) | 25,508,400) | 23,610,800) | 22,823,300) | 22,245,500) | 20,719,200) | |
| Shareholders’ equity | 7,718,500) | 7,285,300) | 6,254,800) | 5,642,900) | 7,182,300) | 5,389,500) | |
| Long-term Activity Ratio | |||||||
| Equity turnover1 | 3.41 | 3.50 | 3.77 | 4.04 | 3.10 | 3.84 | |
| Benchmarks | |||||||
| Equity Turnover, Competitors2 | |||||||
| Costco Wholesale Corp. | 10.79 | 10.93 | — | — | — | — | |
| Target Corp. | 8.26 | 6.48 | — | — | — | — | |
| Walmart Inc. | 6.82 | 6.86 | — | — | — | — | |
| Equity Turnover, Sector | |||||||
| Consumer Staples Distribution & Retail | 7.68 | 7.45 | — | — | — | — | |
| Equity Turnover, Industry | |||||||
| Consumer Staples | 5.26 | 5.06 | — | — | — | — | |
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
Equity turnover = Net sales ÷ Shareholders’ equity
= 26,309,800 ÷ 7,718,500 = 3.41
2 Click competitor name to see calculations.
Net sales exhibited a consistent upward trend between January 2017 and January 2022, increasing from approximately $20.7 billion to $26.3 billion. Despite this steady growth in revenue, the equity turnover ratio demonstrated volatility, reflecting a shifting relationship between the company's sales volume and its shareholders' equity base.
- Net Sales Growth
- A continuous year-over-year increase in net sales is observed, indicating a stable expansion of market reach and revenue generation throughout the six-year period.
- Shareholders' Equity Dynamics
- Equity levels experienced significant fluctuations, characterized by a peak in February 2018, a subsequent sharp decline in February 2019, and a steady recovery leading up to January 2022, where equity reached its highest point of $7.7 billion.
- Equity Turnover Trends
- The equity turnover ratio peaked at 4.04 in February 2019, coinciding with the period of lowest shareholders' equity relative to sales. Following this peak, a gradual downward trend is observed, with the ratio declining to 3.41 by January 2022. This indicates that in the latter half of the period, the growth of the equity base outpaced the growth of net sales, resulting in a decrease in the efficiency of equity utilization to generate revenue.
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