1. SALONI BAID, ANGELA CIPOLA,EZRA KASSIN, Stephany Carvajal DOLLAR TREE, INC.

2. HISTORY Dollar Tree, Inc. operates discount variety stores in the United States and Canada. Sells Variety of products Toys, food, gifts, greeting cards etc. Dollar Tree’s Business model: Everything $1 or less! Founded in 1986 Based in Chesapeake, Virginia. Sector: Retail, Consumer Goods, Services Industry: Discount.Variety stores Full Time Employees:17,600

3. History Initial Public Offering in March of 1995 at $15 a share. Dollar Tree acquired many companies throughout the years. By 2012, operated approximately 5,080 stores and exceeded $7 billion in sales. Recently, the company is in talks to buy out Family Dollar

4. WHY DOLLAR TREE To analyze the factors that contributed to the firm’s success Leading company that targets customers due to their low cost distribution Acquired and opened thousands of stores in the past few years Competitors are Family Dollar, 99 cents store, etc.

5. Dollar Tree Today

6. Balance Sheet

7. Profitability

8. Financial Strength

9. Dollar Tree Ratios (2012-2014)

10. Dollar Tree Vs. Comps

11. Dollar tree vs. Industry Average CompanyIndustry Short term Solvency: Current Ratio21.19 Quick Ratio0.51 Long Term Solvency Total Debt Ratio57.7653.61 Long Term Debt Ratio27.337.4 Interest Coverage (TIE)62.96105.09 Asset management Measures Inventory Turnover7.587.66 Profitibility Measures Profit Margin7.614.23 ROA21.528.23 ROE47.6217.61 Marekt Value Measures P/E23.4237.28

12. CAPITAL STRUCTURE: DEBT & EQUITY Debt VS Equity  2014 Debt-Equity Ratio = 0.66  2014 Total Debt Ratio = 57.76%

13. Sustainable Growth Rate SGR= [ROE x Retention Ratio]/[1 - (ROE x Retention Ratio)] SGR for 2014= [.509695054 x 1]/[1 – (.509695054 x 1)] = 1.039547037 x 100 = 103.95% SGR for 2013= [.37143853 x 1]/[1 – (.37143853 x 1)] =.5909342964 x 100 = 59.09% SGR for 2012= [.363156329 x 1]/[1 – (.363156329 x 1)] =.5702440733 x 100 = 57.02%

14. Internal Growth Rate IGR= [ROA x Retention Rate]/[1-(ROA x Retention Ratio)] IGR for 2014= [.215267506 x 1]/[1 – (.215267506 x 1)] =.274319602726 x 100 = 27.43% IGR for 2013= [.225036337 x 1]/[1 – (.225036337 x 1)] =.290383082129 x 100 = 29.04% IGR for 2012= [.209696814 x 1]/[1 – (.209696814 x 1)] =.26533717403 x 100 = 26.53%

15. Decomposing ROE using DuPont Identity ROE=Net Income Sales × Sales Assets × Assets Total Equity ROE for 2014= (596,700/7, 840,300) × (7,840,300/1, 035,300) × (1,035,300/1, 170,700) =0.5097 ROE for 2013= (619,300/7, 394,500) × (7,394,500/971700) × (971700/1, 667,300) =0.3714 ROE for 2012= (488,300/6, 630,500) × (6,630,500/867, 400) × (867,400/1, 344,600) =0.3632

16. Comparison YearsROEProfit MarginTotal Asset Turnover Equity Multiplier 20140.50977.61%7.573088.43% 20130.37148.38%7.609958.28% 20120.36317.36%7.644164.51% ROE= Profit Margin x Total Asset Turnover x Equity Multiplier

17. COST OF DEBT Using a competitor to determine cost of debt: Dollar General Dollar Gen Corp New 3.25% | Maturity:10 YTM = 4.45% After Tax Cost = 2.77% Corp Tax Rate= 37.8

18. DLTR Vs S&P 500

19. CAPM Calculation In order to calculate WACC, we need to calculate The Cost of Equity (rE) using Capital Asset Pricing Model (CAPM)

20. CAPM CAPM= (.7+.03)*(.11-.03)= 8.6%

21. Weighted Average Cost of Capital The weighted average cost of capital (WACC) is the rate of return that a company is expected to pay to all its security holders to finance its assets. WACC= (D/V) Rd (1-Tc) + (E/V) Re WACC = (520,550,000/14,580,550,000) (.0296) (1 -.3717) + (14,060,000,000/14,580,550,000) (.086) WACC = 8.36%