Question: The following data (amounts in millions) are
The following data (amounts in millions) are taken from the January 30, 2009, and February 1, 2008, comparative financial statements of Dell Inc., a direct marketer and distributor of personal computers (PCs) and PC-related products:
At February 2, 2007, total assets were $25,635 and total stockholders’ equity was $4,328.
a. Calculate Dell, Inc.’s , working capital, current ratio, and acid-test ratio at January 30, 2009, and February 1, 2008. Round your ratio answers to two decimal places.
b. Calculate Dell’s ROE for the years ended January 30, 2009, and February 1, 2008. Round your ratio answers to two decimal places, and your percentage answers to one decimal place.
c. Calculate Dell’s ROI, showing margin and turnover, for the years ended January 30, 2009, and February 1, 2008. Round your ratio answers to two decimal places and your percentage answers to one decimal place.
d. Evaluate the company’s overall liquidity and profitability.
e. Dell, Inc. , did not declare or pay any dividends during the years ended January 30, 2009, or February 1, 2008. What do you suppose is the primary reason for this?
The following historical data were derived from Dell, Inc.’s , consolidated financial statements (in millions).
Note: Past data are not necessarily indicative of the results of future operations.
f. Are the trends expressed in these data generally consistent with each other?
g. In your opinion, which of these trends would be most meaningful to a potential investor in common stock of Dell, Inc. ? Which trend would be least meaningful?
h. What other data (trend or otherwise) would you like to have access to before making an investment in Dell, Inc. ?
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DELL INC. Consolidated Statoments of Income Flscal Year Ended January 30, 2009 February 1, 2008 Net revenue.. $61,101 $61,133 Cost of net revenue. 50,144 49,462 Gross margin 10,957 11,671 Operating expenses: Selling, general, and administrative. Research, development, and engineering. Total operating expenses 7,102 7,538 665 693 7,767 8,231 Operating Income. 3,190 3,440 Investment and other Income, net. 134 387 Income before Income taxes. 3,324 3,827 Income tax provision.. 846 880 Net Income $ 2,478 $ 2,947
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