Deep-discount retailer Dollar Tree (NASDAQ:DLTR) reported fiscal third-quarter (ended Nov. 1) financial results last night, turning in income-statement numbers that are sure to please investors. Sales and profits rose while margins held strong. The company expressed optimism about the holiday season and, it would appear, quarters to come.

Investors have come to expect good things from Dollar Tree recently, its shares outperforming the Standard and Poor's 500 over the last 12 months. That's no small achievement given a difficult competitive environment. While its low, low price points would certainly seem to make sense in slow economic times, the concept of value retailing is hardly a niche. Besides direct comparisons such as 99 Cents Only (NYSE:NDN), Dollar Tree must also contend with companies such as Target (NYSE:TGT) and Wal-Mart (NYSE:WMT), closeout retailers the likes of Big Lots (NYSE:BLI), and even drugstore chains such as CVS (NYSE:CVS).

But while the company's income statement has generally impressed over time, a quick trip to the balance sheet shows some numbers moving in the opposite direction. This is very apparent by looking at the company's Flow Ratio, a key metric in the Rule Maker investment strategy. A low "Flowie" suggests, as Zeke Ashton once wrote, "a light business model and/or excellent financial management; the company might also possess powerful financial leverage due to leadership in the industry."

As for Dollar Tree, calculating full-year Flowies for the last four years (in an attempt to remove retail seasonality from the picture) and the trailing 12 months through August, we see a number that was once outstanding. A figure below 1.0, as Dollar Tree had in 1999, means a company collects bills before it pays 'em out. But the company's Flow Ratio has crept steadily higher. It was at 1.86 to close 2002. (In the article linked above, Zeke suggests 3.0 as "run away" territory.)

We can cut the company some slack because, in retail, consistent Flow Ratios below 1.0 are pretty rare. The business model, based on building stores and stacking up inventory, is hardly "light." But it's the trend that's worth watching here, and it's a useful reminder to look past the income statement when analyzing growing companies.

Read what other Fools are saying on the Dollar Tree discussion board.

Dave Marino-Nachison can be reached at