Respond to both discussions below. This includes 2 replies one classmates and the faculty member.
Respond to the following in a minimum of 175 words:
Other than ratio and ratio analysis (Chapter 4) reading this week, we also address working capital management. Let’s discuss further how that is accomplished and what elements you as managers must be aware of (Chapter 5)? This will help with your final assignment.
The ratio that was chosen this week was the debt-to-equity ratio. This ratio is a leverage for the company to use debts and calculate the liabilities and divide them from the total share equity. Debt to equity ratios can be different within other companies. When using this strategy, the company is making risk. When the risk is not so high the company is not allowing for the finances to expand. Another fact is that investors investigate long-term debt rather than the short term because of certain obligations.
I was looking for the calculations to plug in to solve the ratio. I chose Dollar Tree because it is a retail store. I was a little confused about what the current liabilities and shareholder’s equity was at first. When I saw the information, I just put the 2 numbers together and divided them to get the answer.
Debt/Equity = 14,279.8 /8,396.5 = 1.70069081
Formula – B2/C2= D2
This shows if the company is in a risky situation to losing everything. The number above shows that it is still below a 2.0 and is in fair standing from the sales. The sales have improved from the last couple of years before the pandemic happened. I saw the cash flow on the balance sheet and noticed the amounts a little higher each quarter from the company’s viewpoint.
Another equation I learned was the total assets for the dollar tree was the liabilities plus the shareholder’s equity equals the total liabilities and shareholder equity.
Assets = 14,279.8 + 8,396.5 = 22,676.3
-Balance Sheet. (2022, August 25). Dollar Tree, Inc. https://corporate.dollartree.com/investors/financial-information/balance-sheet
-Fernando. J (2022, August 10). Debt-to-Equity (D/E) Ratio Formula and How to Interpret It (MANSA, Ed.). Investopedia. https://www.investopedia.com/terms/d/debtequityratio.asp
****RESPOND AND INCLUDE IN YOUR ANSWER what would you assess about the Dollar Tree’s financial performance with just looking at those two ratios, Ryan? (WAS THE RESPONSE TO THE CLASSMATE BUT I WANT TO COORDINATE THE ANSWER IN RESPONSE TO RYANS POST)