Dollar Tree (WBO:DLTR) ROC % : 5.02% (As of Oct. 2024)

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What is Dollar Tree ROC %?

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Dollar Tree's annualized return on capital (ROC %) for the quarter that ended in Oct. 2024 was 5.02%.

As of today (2024-12-15), Dollar Tree's WACC % is 6.14%. Dollar Tree's ROC % is 0.68% (calculated using TTM income statement data). Dollar Tree earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Dollar Tree ROC % Historical Data

The historical data trend for Dollar Tree's ROC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

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Dollar Tree ROC % Chart

Dollar Tree Annual Data

Trend

Jan15

Jan16

Jan17

Jan18

Jan19

Jan20

Jan21

Jan22

Jan23

Jan24

ROC %

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8.33

7.98

8.51

9.07

0.96

Dollar Tree Quarterly Data
	Jan20	Apr20	Jul20	Oct20	Jan21	Apr21	Jul21	Oct21	Jan22	Apr22	Jul22	Oct22	Jan23	Apr23	Jul23	Oct23	Jan24	Apr24	Jul24	Oct24
ROC %	Get a 7-Day Free Trial															4.50	-14.18	6.75	3.12	5.02

Dollar Tree ROC % Calculation

Dollar Tree's annualized Return on Capital (ROC %) for the fiscal year that ended in Jan. 2024 is calculated as:

	ROC % (A: Jan. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Jan. 2023 )	+	Invested Capital (A: Jan. 2024 ))	/ count )
=	171.85 * ( 1 - -0.98% )	/	( (18715.626	+	17377.557)	/ 2 )
=	173.53413	/	18046.5915
=	0.96 %

where

	Invested Capital		(A: Jan. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	21364.509	-	2052.365	-	( 596.518	-	max(0, 3920.986	-	5908.669	+	596.518	))
=	18715.626

	Invested Capital		(A: Jan. 2024 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	20217.573	-	2211.278	-	( 628.738	-	max(0, 4311.571	-	5629.819	+	628.738	))
=	17377.557

Dollar Tree's annualized Return on Capital (ROC %) for the quarter that ended in Oct. 2024 is calculated as:

	ROC % (Q: Oct. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jul. 2024 )	+	Invested Capital (Q: Oct. 2024 ))	/ count )
=	1224.244 * ( 1 - 23.71% )	/	( (18705.259	+	18508.256)	/ 2 )
=	933.9757476	/	18606.7575
=	5.02 %

where

	Invested Capital		(Q: Jul. 2024 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	20852.505	-	2062.053	-	( 525.817	-	max(0, 5531.908	-	5617.101	+	525.817	))
=	18705.259

	Invested Capital		(Q: Oct. 2024 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	21419.51	-	2710.946	-	( 640.397	-	max(0, 5887.409	-	6087.717	+	640.397	))
=	18508.256

Note: The Operating Income data used here is four times the quarterly (Oct. 2024) data.

Dollar Tree (WBO:DLTR) ROC % Explanation

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.

There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.

Why is ROC % important?

Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Dollar Tree's WACC % is 6.14%. Dollar Tree's ROC % is 0.68% (calculated using TTM income statement data). Dollar Tree earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Be Aware

Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.

Dollar Tree ROC % Related Terms

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Dollar Tree Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Defensive » Retail - Defensive » Dollar Tree Inc (WBO:DLTR) » Definitions » ROC %

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Address

500 Volvo Parkway, Chesapeake, VA, USA, 23320

Website

https://www.dollartree.com

Dollar Tree operates discount stores across the United States and Canada, with over 8,600 shops under its namesake banner and nearly 7,800 under Family Dollar. About 47% of Dollar Tree's sales in fiscal 2023 were composed of consumables (including food, health and beauty, and cleaning products), around 45% from variety items (including toys and homewares), and over 5% from seasonal items. The Dollar Tree banner sells most of its merchandise at the $1.25 price point and positions its stores in well-populated suburban markets. Conversely, Family Dollar primarily sells consumable merchandise (80% of the banner's sales) at prices below $10. About two-thirds of Family Dollar's stores are located in urban and suburban markets, with the remaining one-third located in rural areas.