Utilization of Resources of Dollar Tree Store
In this area management was very proficient. The utilization of resources section examines how was management able to use the assets provided by investors and generated by the company’s operations to cause sales. A frequent principle used in economics is that the employment of an additional resource in the organization does not necessarily mean improvement in revenue of the firm, commonly known as marginal revenue. Such ratios are therefore important because they portray managerial efficiency in the adoption of the firm’s assets to create sales.
The meanings and implications of each of the utilization of resources ratios calculated in the latter part of this assignment are:
• Utilization of capital employed – this ratio examines how effectively has the capital employed of the organization been used to generate sales. In this case a slight positive increase was noted, meaning improved effectiveness.
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• Utilization of total assets – the ability to create sales from the total assets of the company is also in line with the capital employed adoption, showing a small increase in managerial efficacy in this area.
This financial ratio can be further subdivided in the two main categories of assets as follows: o Utilization of fixed assets – the effectiveness increase in the use of the firm’s fixed assets was small. o Utilization of current assets – however, a hefty increase of 0. 38 times was achieved from the current assets use. This adheres with the increase in the stock turn noted in the liquidity section and shows better ability by managers in the use of inventories and other current assets.
• Utilization of net current assets – the highest increased in the utilization of resources arose in the net current assets by 0. 61 times. This fully abides with the financial statements we are examining. As noted earlier, the net current assets of the organization decreased during the years by 4. 04%, while the sales revenue rose by 8. 57%. Therefore, with lower net current assets management was talented to increase the sales revenue during the year, as shown by the changes in the sales and net current assets figures. Indeed managers should be acclaimed for the good use of the resources of Dollar Tree Store.