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GuruFocus has detected 3 Warning Signs with Dollar Tree Inc \$DLTR.
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Dollar Tree Inc (NAS:DLTR)
Quick Ratio
0.51 (As of Jan. 2017)

The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets. It is calculated as a company's Total Current Assets excludes Inventory divides by its Total Current Liabilities. Dollar Tree Inc's quick ratio for the quarter that ended in Jan. 2017 was 0.51.

Dollar Tree Inc has a quick ratio of 0.51. It indicates that the company cannot currently fully pay back its current liabilities.

DLTR' s Quick Ratio Range Over the Past 10 Years
Min: 0.17   Max: 1.74
Current: 0.51

0.17
1.74

During the past 13 years, Dollar Tree Inc's highest Quick Ratio was 1.74. The lowest was 0.17. And the median was 0.85.

DLTR's Quick Ratio is ranked lower than
69% of the 345 Companies
in the Global Discount Stores industry.

( Industry Median: 0.75 vs. DLTR: 0.51 )

Definition

The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets. For this reason, the ratio excludes inventories from current assets.

Dollar Tree Inc's Quick Ratio for the fiscal year that ended in Jan. 2017 is calculated as

 Quick Ratio (A: Jan. 2017 ) = (Total Current Assets - Inventory) / Total Current Liabilities = (3938 - 2865.8) / 2105.9 = 0.51

Dollar Tree Inc's Quick Ratio for the quarter that ended in Jan. 2017 is calculated as

 Quick Ratio (Q: Jan. 2017 ) = (Total Current Assets - Inventory) / Total Current Liabilities = (3938 - 2865.8) / 2105.9 = 0.51

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Explanation

The quick ratio is more conservative than the current ratio because it excludes inventories from current assets. The ratio derives its name presumably from the fact that assets such as cash and marketable securities are quick sources of cash. Inventories generally take time to be converted into cash, and if they have to be sold quickly, the company may have to accept a lower price than book value of these inventories. As a result, they are justifiably excluded from assets that are ready sources of immediate cash.

In general, low or decreasing quick ratios generally suggest that a company is over-leveraged, struggling to maintain or grow sales, paying bills too quickly or collecting receivables too slowly. On the other hand, a high or increasing quick ratio generally indicates that a company is experiencing solid top-line growth, quickly converting receivables into cash, and easily able to cover its financial obligations. Such companies often have faster inventory turnover and cash conversion cycles.

The higher the quick ratio, the better the company's liquidity position.

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Dollar Tree Inc Annual Data

 Jan08 Jan09 Jan10 Jan11 Jan12 Jan13 Jan14 Jan15 Jan16 Jan17 quick ratio 0.36 0.97 1.31 1.00 0.59 0.74 0.50 1.11 0.50 0.51

Dollar Tree Inc Quarterly Data

 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Jan17 quick ratio 0.57 1.11 8.12 0.82 0.67 0.50 0.61 0.68 0.50 0.51
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