Dell's financial analysis shows improving liquidity from 2011 to 2012 based on ratio calculations. The current ratio increased from 1.05 to 1.09, indicating greater ability to pay short-term debts. However, the quick ratio of 0.92 to 0.97 suggests Dell still relies on inventory to meet obligations. Asset turnover declined slightly from 0.58 to 0.55, meaning assets were not fully utilized to generate sales. Overall, the analysis found signs of better liquidity management but also opportunities for Dell to optimize its asset usage.

1. Letter of Transmittal
15th December, 2014
Nishat Akther
Faculty
Department of Business Administration
Southeast University.
Submission of an assignment on: Financial analysis on Dell Inc.
Dear Madam,
This is our pleasure to complete the assignment and submit the report on “IInnttrroodduuccttiioonn ttoo
FFiinnaanncciiaall AAccccoouunnttiinngg.” We organized the report on the basis of the Study in ffiinnaanncciiaall aannaallyyssiiss.
This report is prepared on the basis of both primary and secondary data. Primary data was
collected by questioning the concerned people of the company during the period of the working
hour; while secondary data was collected from various printed documents like annual report of
the company. Although the main purpose of the report is to kknnooww tthhee ffiinnaanncciiaall aannaallyyssiiss. We
would like to express our gratitude to you for your tiresome effort for us which provided the
opportunity to complete this assignment.
Thank you
For your kind deliberation.
Yours Sincerely,
On behalf of the group
Rafat Ara Toma (2013210000001)

2. Acknowledgement
At the very beginning we want to praise our respectable course teacher
to Nishat Akther give us the assignment of preparing a ffiinnaanncciiaall
ssttaatteemmeenntt aannaallyyssiiss. It has been a great honor for us to take part in such
a prominent opportunity. Inestimable suggestion, invariable guidance,
opinion, advice and reasonable help throughout the assignment work
which smooth the achievement of this assignment. To entire staff
without whose interest and co-operation we could not have produced
this study. In the end we like to honor those persons whoever
comprehend this proposal, with the name of Almighty Allah.
Executive Summary
This financial analysis report examines high profile competitors, Dell
within the computer/technology industry in order to evaluate company
performance and financial health. Overall company strategies were
reviewed and considered along with the financial analysis to come to a
conclusion for recommendation of investment. The reports introduction
gives an overview to the computer/technology industry and expands on
the strategies executed by Dell Inc.

3. The financial analysis covers common-size income statements and
balance sheets, comparative income statements and balance sheets, and
various financial statement ratios such as liquidity, capital structure and
solvency, return on investment, operating performance, asset utilization
and market measures from year 2011 to year 2012.
A pro forma look ahead estimated financial performance is generated
for each company and assumptions explored that helped derive the
financial data for the pro forma. Conclusions are drawn from the above
stated financial analysis as well as areas for improvement and
investment recommendations. Dell well known companies competing in
an ever evolving and expanding industry. The industry is in every
segment from personal to educational to professional. Dell made waves
throughout not only the computer/technology industry but in multiple
industries for its ability to rethink distribution and customized sales
direct to customers. While companies offer products and services, Dell
has a slightly more diverse portfolio and is a bit more brand recognized
as a trusted and quality company. From years 2011-2012, Dell was able
to keep downward pressure on the growth of cost of goods sold.
Through this time span, Dell secured a lower liquidity risk for its
shareholders .

4. Dell choosing to not participate in this option for its investors. Dell’s
approach is that instead of paying out a dividend, those funds are used to
reinvest into the company to produce higher profits and overall create a
stronger more financially fit company.
Dell’s revolutionary process thinking along with its growth potentials,
recent strategic acquisitions, low liquidity risk, and good return on
investment makes a good case for potential investors to pursue.
Table of Contents
Letter of Transmittal
Acknowledgement
Executive Summary
Introduction

5. I. Activity Ratio
II. LiquidityRatio
III. ProfitabilityRatio
IV. SolvencyRatio
V. ValuationRatio
Findings
Recommendation
Conclusion
Introduction
The computer industry has come a long way since its first inception
with the invention of Electronic Numerical Integrator and Computer in
1946. This industry is comprised of many items such as computers,
monitors, printers, scanners, mainframes, servers, electronic computer
components, networking and workstations to name a few. The industry
started a major growth phase in the 1980’s with the production of the
personal computer and has grown every since with many new products

6. introduced. Innovations within this industry have had positive rippling
effects to outside industries, from manufacturing to banking.
While the United States market is fairly saturated and mature, the
computer/technology industry is very much in the growth phase on a
global basis. The drivers behind this growth are both innovations in
technology and especially increased consumer spending in Asia and
Africa. The international value of this industry is expected to grow and
surpass $620 billion in 2011, roughly a 27% increase from 2006. Dell
market share the computer/technology industry due to brand name
loyalty, advanced supply chain management techniques and producing
innovating products for an affordable price. Dell over the last decade we
have seen the price of the average computer go from close to $2,000 to
less than $1,000. In part, pressures to add customers have lead to price
wars between the two competitors.
However, the price wars have not affected the quality of the products in
those lower priced tiers.Dell firms have increased marketing efforts to
enhance their brand recognition and strived to reduce cost through
improved supply chain management and technology innovation. Both
companies have room for growth, especially as they enter the portable

7. tablet market. It will also be interesting to see how Dell fairs in the cell
phone market with its recent acquisition of the company Palm and how
Dell with react to their success or failure within this market segment.
Objectives
The primary objectives for this financial analyst report are major
companies the computer/technology industry Dell. Suggestions for
company improvement will be discussed as well as recommendations for
investment. A pro forma financial analysis for each company’s expected
performance for 2011 will be conducted and assumptions that lead to
these figures. The company’s performance will cover the years spanning
from 2011 through 2012 with analysis of each company’s common-size
income statement, common-size balance sheet, comparative income
statement, comparative balance sheet and financial statement ratios.

8. Financial Analysis
THE DELL COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
2012 2011
(In millions except par value) As Adjusted
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 8,442 $ 12,803
Short-term investments 5,017 1,088
TOTAL CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS 13,459 13,891
Marketable securities 3,092 144
Trade accounts receivable, less allowances of $53 and $83, respectively 4,759 4,920
Inventories 3,264 3,092
Prepaid expenses and other assets 2,781 3,450
Assets held for sale 2,973 —
TOTAL CURRENT ASSETS 30,328 25,497

9. EQUITY METHOD INVESTMENTS 9,216 7,233
OTHER INVESTMENTS, PRINCIPALLY BOTTLING COMPANIES 1,232 1,141
OTHER ASSETS 3,585 3,495
PROPERTY, PLANT AND EQUIPMENT — net 14,476 14,939
TRADEMARKS WITH INDEFINITE LIVES 6,527 6,430
BOTTLERS’ FRANCHISE RIGHTS WITH INDEFINITE LIVES 7,405 7,770
GOODWILL 12,255 12,219
OTHER INTANGIBLE ASSETS 1,150 1,250
TOTAL ASSETS $ 86,174 $ 79,974
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 8,680 $ 9,009
Loans and notes payable 16,297 12,871
Current maturities of long-term debt 1,577 2,041
Accrued income taxes 471 362
Liabilities held for sale 796 —
TOTAL CURRENT LIABILITIES 27,821 24,283
LONG-TERM DEBT 14,736 13,656
OTHER LIABILITIES 5,468 5,420
DEFERRED INCOME TAXES 4,981 4,694
THE DELL COMPANY SHAREOWNERS’ EQUITY
Common stock, $0.25 par value; Authorized — 11,200 shares;
Issued — 7,040 and 7,040 shares, respectively 1,760 1,760
Capital surplus 11,379 10,332
Reinvested earnings 58,045 53,621
Accumulated other comprehensive income (loss) (3,385) (2,774)

10. Treasury stock, at cost — 2,571 and 2,514 shares, respectively (35,009) (31,304)
EQUITY ATTRIBUTABLE TO SHAREOWNERS OF THE DELL COMPANY 32,790 31,635
EQUITY ATTRIBUTABLE TO NONCONTROLLING INTERESTS 378 286
TOTAL EQUITY 33,168 31,921
TOTAL LIABILITIES AND EQUITY $ 86,174 $ 79,974
Years 2011 2012
3013.1
000,899,4$
000,374,6$
AssetsTotal
Sales
:TurnoverAssetTotal 

11. In 2011, the firm’s ability to cover its current liabilities with its current
assets was 1.05. In 2012, the ratio goes up to 1.09 as compared to 2011,
which means that the company has the ability to pay its liabilities, as the
definition says that higher the ratio, greater the ability of the firm to pay
its bills. This tells that Dell is improving their liquidity and efficiency,
because their current ratio is improving.
Years 2011 2012
Quick Ratio 0.92 0.97
Current Ratio 1.05 1.09
347.2
500,837,1$
000,313,4$
InventoryAvg.
SoldGoodsofCosts
:TurnoverInventory 

12. According to the definition of Acid Test Ratio, the company should have
the ability to pay its liabilities through its most liquid assets. The table
shows that in 2011, the firm has the ratio 0.92 cents. Then we observe a
slight improvement in 2012. So we can figure out from the ratios that
Dell still cannot pay its debts without its inventory. This leads us to
believe that Dell is a somewhat risky business, even though it is the
largest in the nonalcoholic beverage industry.
Years 2011 2012
Assets Turnover 0.58 0.55
3013.1
000,899,4$
000,374,6$
AssetsTotal
Sales
:TurnoverAssetTotal 

13. The ratio is supposed to be high. Here we can see that the Dell
company’s total asset turn over ratio in 2011 was 0.58, which means that
the company generated more revenue per dollar of asset investment. The
ratio then comes slightly down in 2012.
Years 2011 2012
Inventory Turnover 5.90 5.80
347.2
500,837,1$
000,313,4$
InventoryAvg.
SoldGoodsofCosts
:TurnoverInventory 

14. The Dell’s Inventory turnover ratios deteriorated from 2011 to 2012,
which means that its ability to sell inventory has relatively come down.
In 2011 Dell had a ratio of 5.90 and in 2012 has a ratio of 5.80. These
ratios are not what we expected; we assumed that the ratios would be
much higher because Dell sell its syrup to bottling partners around the
world so it does not need to deal with the storing of the product
Years 2011 2012
Avg. Collection Period 38.60 36.17
3013.1
000,899,4$
000,374,6$
AssetsTotal
Sales
:TurnoverAssetTotal 

15. The ability of the firm of collecting the receivables in the specific time.
Here in the year 2011 the turnover in days was almost 39, but the
collection days decrease in the year 2012 and the collection period of
approximately 36 days is well within the 60 days allowed in the credit
terms. This shows that the collection is faster as compared to the
previous year.
Years 2011 2012
%01.11
000,899,4$
500,539$
AssetsTotal
EBIT
:ROA 

16. Gross Profit Margin % 60.90 60.32
The ratio should be high according to the definition. Because higher the
ratio, higher will be the firm’s ability to produce goods and services at
low cost with high sales. Here in this table there is small difference
between the ratios in two years, but its still high, which means it is
favorable
Operating Profit Margin:
Years 2011 2012
Operating Profit Margin % 21.80 24.59
%46.8
000,375,6$
500,539$
Sales
EBIT
:MarginProfitNet 

17. Dell’s operating profit margin has increased in 2012 than the margin in
2011 by approximately 3%. This increase in Operating Profit Marin is
mainly due to growth of net revenue, good cost control and strong
productivity in company in 2012. This higher margin reflects that the
Dell is more efficient cost management or the more profitable business.
Net Profit Margin:
Years 2011 2012
Net Profit Margin % 18.40 18.78
%46.8
000,375,6$
500,539$
Sales
EBIT
:MarginProfitNet 

18. According to the definition, higher the ratio, higher will be the firm’s
ability to pay its taxes. In the year 2011, the margin was little low but in
2012 the margin increases by 0.4%. For the company, roughly 0.38 cents
out of every sales dollar consists of ‘After Tax Profit'. Dell is more
efficient at converting sales into actual profit and its cost control is good.
Return on Assets (ROA):
Years 2011 2012
ROA % 10.70 10.46
%46.8
000,375,6$
500,539$
Sales
EBIT
:MarginProfitNet 

19. The decrease in Return on Assets indicates that the company is
generating less profits from all of its resources in the year 2012 as
compared to the year 2011. The higher of this ratio is, the better for the
company. Therefore this decrease in Dell’s ratio is indicating that the
company is not that much prospering
Return on Equity (ROE):
Years 2011 2012
ROE % 27.10 27.51
%66.6
000,817,2$
500,187$
EquityCommonTotal
DividendsStock
Preferred-EAT
:ROE 

20. The ratio should be higher. Here starting from 2011, the ratio was
27.10% and goes up in 2012 to 27.51%. This increase in Return on
Equity is a good thing for stockholders and indicates that Dell is using
the equity provided by stockholders during this specific year effectively
and using it to generate more equity for the owners
.
Conclusionand Recommendationfor Investment
Dell companies had their share setbacks due to the economic
recession that started in 2006. The recession predominantly
affected the areas of sales and investments the most. However,
the downturn did highlight the ability to acquire other
companies and their assets to broaden and expand each
company’s market reach within industry. One of the better ways
to determine a company’s direction financially is to look at the
last few years of their performance and see where they
physically placed their priorities. Dell’s growth strategy involves

21. reaching more customers worldwide through new distribution
channels, such as consumer retail, expanding their relationships
with value-added resellers, and augmenting select areas of their
business through targeted acquisitions. Dell’s sales will continue
at a larger rate than they did in the pro forma 2011 due to more
focus being able to be directed at increasing traditional sales as
well as the technology services sector instead of laboring over
the restructuring from the acquisition, as they had to focus on
over the last two years. Also, to improve net income Dell should
continue to work out strategic alliances to put downward
pressures on cost of goods sold and selling, general
and administrative costs. Dell had lower liquidity risks good
return on investments, which weigh heavily into an investors
decision. Dell due to enhanced product and services
diversification. With Dell’s larger brand name and recent
acquisitions over the last several years makes them an
interesting investment. Their price per share is believed to be
undervalued and a good buy for such a prominent company, and
their expanding market exposure into the tablet and possibly cell
phone industry could increase their market share even more.
There is also the dividend factor with Dell stock, which creates a

22. built in incentive for potential investors. Currently Dell does not
participate in distributing dividends to its shareholders. Dell has
had substantial gains in the market through diversification of
sales and services offered. Also, Dell appears to have a better
management of their operating expenses, which allows for them
to post better net incomes. Dell companies’ are strong and
healthy investments for potential investors. After reviewing their
company strategies and recent year’s financial statements and
ratios, it is believed that Dell would be a better investment with
its larger diversification, brand name, lower operating expenses,
larger net incomes, higher sales volumes and better growth
potential in the long run.
References
Wahlen, J., Baginski, S., and Bradshaw, M. (2010). Financial
Reporting, Financial Statement
Analysis, and Valuation: A Strategic Perspective. 7th ed., South-
Western College Pub
Investopedia (n.d.). Retrieved from http://
www.investopedia.com
Yahoo! Finance (n.d.). Retrieved from http://finance.yahoo.com

23. Yahoo! industry center (n.d.). Retrieved from
http://biz.yahoo.com/ic
Google Finance (n.d.). Retrieved from
http://www.google.com/finance
Dell, Inc. and Subsidiaries. (Jan 2012). Form 10-K.
Dell, Inc. and Subsidiaries. (Jan 2011). Form 10-K.