To use the knife as the tool, means that you are able to move the circumstances to be favorable to you. You know how to deal with problems and troubles. The knife helps you to reach your goals in life. If you are cutting something with the knife, it shows that you are already in the process while dealing with it. The knife that is broken, shows the problems you do not have ability to solve.
Dream dictionary: Knife (as a tool) dream meanings
The knife in dreams is used as the tool to hurt the others. That is why it is almost never a good omen. You feel you need to protect yourself or you wish to do the harm to others. The penknife indicates the legal troubles the dreamer will face, but only it is opened, it is closed, he will do well. The rusty knife signifies marriage problems and the sharp one very personal ones. The knife that is not sharp and is dirty, indicates the hard work the dreamer will have.