Financial Performance Management

FINANCIAL PERFORMANCE MANAGEMENT
Student Name: Hira Bashir
Student Id: 105
MBA (3.5 years)
University of Sargodha
This assignment is related to business performance and strategic management process by using
finance in Dell. It also discussed the importance of finance in business and managed the tools to
develop the new project in Dell.

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Table of content
Financial performance management.................................................................................................4
Introduction and background of Dell..............................................................................................4
Task 1: understand the impact of financial resourcing organization’s performance..................4
1.1 Examine the needs for financial resources within a strategic plan...............................4
1.1.1 Types of Financial resources required................................................................................4
1.1.2 Importance of finance in strategic planning........................................................................5
1.1.3 Working capital of Dell...........................................................................................................5
1.1.4 Strategic planning of Dell ......................................................................................................6
1.2 Critically evaluate the impact of financial resource decision making on business
strategy ..............................................................................................................................................6
Task 2: Understand how to use the appraisal methods to manage financial resources...........6
2.1 Critically analyse and evaluate how alternative strategies investment opportunities are
assessed using investment appraisal methods...........................................................................7
2.1.1 Net present value ...................................................................................................................7
2.1.2 Discount rate...........................................................................................................................7
2.1.3 Benefit and cost ratio.............................................................................................................8
2.1.4 Payback period.......................................................................................................................8
2.1.5 Multiple criteria analysis ........................................................................................................8
2.2 Examine data to used when making decisions about the use of financial resources and
justify recommendations about the use of financial resources .................................................8
Task3: Know how to assess the performance of organization....................................................10
3.1 Justify the selection of data to use in analysing business performance .........................10
3.1.1 Profitability ratios ..................................................................................................................10
3.1.2 Liquidity ratios.......................................................................................................................11
3.1.3 Efficiency ratios.....................................................................................................................12
3.2 Critically evaluate the performance of strategic decision making analyse business
information to make the substitute about improving business performance.........................13
Task 4: Understand how to use management accounting method to manage resources
effectively.............................................................................................................................................14
4.1 Appraise methods by which financial resources are allocated, managed and
controlled. Analyse the budget and budget out turns ...............................................................14
4.2 Systematically analyse costing report and compare the organizational performance
against the cost and budgets .......................................................................................................15

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4.3 Examine actions to be taken in response to costing and budgetary information ..........16
References ....................................................................................................................................16

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Financial performance management
Introduction and background of Dell
Dell was commenced in November, 1984 just based on information technology in
America. Dell established personal computers in 1986 and developed the criteria to
shape the small business and enterprise computer system. Dell consists to produce
software as well as hardware and take leader possibilities to innovate the products
and services (McGraw-Hill Companies, 1999). The Dell produced multiple products
to promote business and prepare the profile. Services are provided and different
notebooks and printers were produced but know in producing mobiles. Dell holds the
industrial market share that offered 3.5 million shares initially in market. The Dell
project introduced different modules and launches smart phones with china mobile
and designed the enterprise portfolio that has different selling products in a product
line (Reeeves & Deimler, 2011). Different types of products introduced different
products having different functions, colour and prices. Customers’ preferences are
more important in laptop selection. Dell has differentiation strategy that based on
customer preferences which include workshops, network and different items of mass
communication introduce to enhance the market share and direct the sales needs to
compute the solution (Hoskison et al. 2011).
Task 1: understand the impact of financial resourcing
organization’s performance
1.1 Examine the needs for financial resources within a strategic plan
Although financial resources are requirement of every company while preparing
strategic planning for organization and managed activities that are used to focus on
operations to ensure the employees working in organization and to established the
responses to get suitable outcomes that can be adjust in organization to change the
environment. Dell put effort to take decisions in the company and guide the
organizational changes that are focused on effective planning and going towards
progress (McGraw-Hill Companies, 1999).
1.1.1 Types of Financial resources required
There are many different methodologies to develop the strategies to develop change
in organization and planning the rules that has similar patterns to assess need
finance. Financial resources have two types as
 Internal sources: internal sources include reserves of Dell and all cash inflows
develop from sales

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 External sources: external sources include all the loans, sale debenture to get
finance and selling shares of company are external sources of company.
The strategic planning associated with non profit professional but still need finance to
overcome the problems being used in the Dell Corporation (McGraw-Hill Companies,
1999). Financial resources are important in phase of planning, company focus on
what type of sources are available and future management can be done by utilizing
these resources and also tell about implementation of strategy by using sources
(Reeeves & Deimler, 2011). Information about sources availability and plan
according to that play a vital role in managing business and considered the drivers to
currently focus on framework (Abell, 1980). The important and financial
consideration of strategic management is to comply with the organizational
development because of financial management tools and operations for developing
the strategies in Dell business.
1.1.2 Importance of finance in strategic planning
No doubt Dell is an information technology company need change day by day as
technology launched by competitors such as Apple, HP etc so strategic planning and
resources are important. Manager planning the stagey and properly formulate in
business to operate differently within limit and plans to afford. After planning phase it
is important to formulate the strategy and get finance from different sources may be
internal or from external to fulfilled the obligation and achieved goals (Clark & Krentz,
2004). To properly formulate strategy Dell manager need to properly estimate the
budget for new strategy and estimate the assets required and liability to develop the
plan in shape of loan and income of staff members and trained them according to
project requirements. All the operations are fulfilled to achieve the sub goals of Dell,
in real sense achieving main goal of Dell. It is very important to create business
strategies to promote business and plan the financial budgets for whole project or for
whole year (McGraw-Hill Companies, 1999).
1.1.3 Working capital of Dell
Financial resources are important in the planning process of organization because
Dell need to promote marketing factors and change overall strategy in business. Dell
is a professional company that can always struggle for market and get market share
as a leading firm (McGraw-Hill Companies, 1999). Working capital of firm able to
provide balance that allows the users to develop the revenues and get debt to
develop new project. Networking capital is important to measure the operations that
are available for company and growing the business by promoting strategies and
utilizing finance too. The driving force that is special to commit Dell that important for
business management and strategy formulation and implementation is forecasting.
About $300 million or less managed in the business to promote and implement new
strategy (Dell.com).

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1.1.4 Strategic planning of Dell
Technology experts of Dell provide range of technologies and visit EBC to create the
plan to achieve goals of organization. Implementing strategies are related to different
management techniques to shape and compute the management of electronic and
wireless activities in record too. Dell computer reached achieve the different
strategies to manufacture computer and fulfilling the order receives from customers.
Business needed three partners as suppliers and customers and computer designer
to build the process of planning and manufacture the customization strategies
(Dell.com).
1.2 Critically evaluate the impact of financial resource decision making
on business strategy
Financial resources plays an important role in business decision making process and
finance is an indicator for managing the strategies in Dell Corporations and
attributable to grow the marketing strategies and managing the market capitalization
to increase the employees and produce new product and services that enable to get
opportunities. Dell Corporation financed the debt and equity for the cost of different
items to introduce the ownership in exchange the stock and investors. Dell
introduced the strategies due to lack of planning and review the SWOT analysis and
able to spend the obstacles to rise the personal orders (McGraw-Hill Companies,
1999). Dell refused different components due to shortage of the money. Important
finance in decision making that formulate and implement the strategies for Dell and
backbone of Dell is financial sources to owns the powerful tools that will able to
operate business properly. Dell introduce the new technology and able to spend
financial resources to get the success in business. No doubt human resources are
not financial resources but need finance to train them according to requirement of
business and new strategies. Salaries are also paid to workforce to get desirable
results from them (Bower, 1982).
Business need financial and operational resources to get the powerful operations in
a business and has an ability to perform well in business that permits investment and
prices availability that is associated with technology. Wastes are reused by
implementing the strategies and able to get finance from them. The capital budget
required to investing in technologies and reduced the overall process to improve the
investment to get proper return from them (Foss, 2009).
Task 2: Understand how to use the appraisal methods to manage
financial resources

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2.1 Critically analyse and evaluate how alternative strategies investment
opportunities are assessed using investment appraisal methods
The main purpose of systematic appraisal of different investment strategies of Dell
has greater impact on decision making process and currently evaluates the
expenditures and projects of company. The documents are prepared for all projects
and techniques to analyse the information and found the methods of appraisal in
business management (Ginsberg, 1989). The appraisal method of strategies is to
follow the cash flows in the Dell to recommend the value of money. Dell gets benefit
from cost and take the account that occur the concept of calculating the investment
by following ways (Mayer, 1991).
2.1.1 Net present value
NPV is appropriate method of analysing cost of the project and negative values
should be taken place because of initial investment and if future values or return
increase than value of NPV may be positive. In this method of project selection and
appraisal Dell analyse the initial investment and also determine the return get from
investment in future. NPV method ranked the projects having same payback period
and able to analyse the profitability in near future (Russell. A,1970).
Advantages
Appraise all estimated projects
Compare the project investments
Disadvantages
Project must be mutually exclusive
Ranked the projects in ascending or descending orders
Small project couldn’t be analyse may be give more return in future.
2.1.2 Discount rate
Concept of discount rate is associated with NPV as it is used to convert the cost into
present value and calculate on bases of
Time preferences

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Opportunity cost of capital
And last is weighted average method
The discount rate method should be effective to select the project from all estimated
projects (Baroum & Patterson,1996).
2.1.3 Benefit and cost ratio
The benefit and cost discounted revenues are divided into investments and able to
prefer the ratios that are greater than one in each project. The project having less
BCR should not be able to proceed in future for benefit (Gray, 1995).
Advantage
It is a simple method
Use for appraise project and help in decision making
Generate the project capacity due to having a fixed scale
2.1.4 Payback period
This method used to identify the amount which initially invested return back in how
much period if period is less than project is perfect for investment. Ranks the project
due to their return and money takes to earn the profit. The payback period is method
of discounting the amount of time and recovers the cost that is perfect indicator of
analysing the performance (Gray, 1995).
2.1.5 Multiple criteria analysis
This process is established to create the project by achieving goals of Dell. The
programmes and communities assessed by utilizing any of above way and solely
mentioned the values in term of money the importance o this process is to solve the
common problem and reduced agency cost of company (Gray, 1995).
2.2 Examine data to used when making decisions about the use of
financial resources and justify recommendations about the use of
financial resources
Dell is an organization of technology want to make the business decision best to
compete into market by their strengthen competitors. Accounting information process
recorded in reports and provided assessment to analyze financial transactions. Dell’s
managers consider financial information to create the decisions about any new
project or implement new strategy in business (Oliver, 1997). Decision making

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system focused on operations that related with new projects. Following are
information required by company for decision making
 Balance sheet information that tell about the assets available for creating and
developing new projects
 Determine the profitability by viewing profitability ratios of company
 Review liquidity of company and liquidity of project as well
 Information about new assets and loans are required for new project
 Information about potential customers, suppliers about material and sale of
new product into market
 Wages of employees required for managing new project (Patton, 1999)
The important tool of financial resources is to formulate strategy into business and
process explained to employees and other line managers into business. Strategy
formulation is the process required finance in different plans and factors are very
powerful in business strategy. Dell want to invest into new technology development
process such as new smart phone introduce into market they must hire experts,
engineers and trained them according to their process (Schendel & Hofer, 1979).
In case of low financial resources Dell limit the project but sometime take loan to
compete into market and reduce the cost of each item by learning curves process or
by changing the suppliers who provide quality product at low cost. The business
decisions are steadily helps to promote the organization by using the following
methods (Patton, 1999)
 Increase production by reducing fixed cost
 Increase profitability by getting material from suppliers at low cost
 Learning curve technique used
 Assets purchase which work for long time duration
Financial statement
It is an important and difficult task for Dell to invest in new project because manager
or strategic planner specify the options and determine the cost of variable and fixed
cost of production as well. Balance sheet analyse the available resources and modify
methods to determine the cost of different objects. The evaluation of financial
statement allowed an advisor to understand the financial position of business and
effectively accomplished the project may be new and suggest the strategy to
implement after formulation. Financial statement provided the criteria to inform about
the cash flow and determine the sale price of each item. Future performance of Dell
based on strategies to receive the project expected result (Shook, 2008).
Recommendation
To increase the profitability of company it is important to improve customer services
to evaluate new projects and increase the business performance. I am going to

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suggest that manager thoroughly evaluate internal and external sources of finance
and analyse the financial statement that help advisors to quickly provide the values
and compare with historical trend. The process can be improved by evaluating the
ability of different proportions of cash flows may be inflow or outflow.
Second and important suggestion is mass production reduce the fixed cost of
company and focus on existing customer to determine the demand. The knowledge
management services are provided to get awareness and offer warranty packages to
increase loyalty and values of customers.
Task3: Know how to assess the performance of organization
3.1 Justify the selection of data to use in analysing business
performance
The ratio analysis is important to assess the business performance, there are four
major ratios that measure the financial statement performance and managed the
liquidity, profitability, efficiency and coverage. Liquidity ratio considered the short
term performance of Dell and actively managed the portfolio. Following are the ratio
analysis tools
3.1.1 Profitability ratios
Financial matrices that used to determine the business abilities to generate profit in
Dell and compare them with expenses done on same profit, the specific period
determine the ratio and ability to indicate the company’s well doing (investopedia,
2013). Some of profitability ratios are net profit ratio and gross profit ratios are given
below.
Net profit ratio
$ m $ m
2012 2013
Net Sales 14,483 14,514
Profit before Tax 497 219
Net Profit /Loss Margin % 3.43% 1.5%
Net profit ratio is a key indicator of measuring profitability it is very useful to compare
the ratio of 2013 with 2012 and analyse the similar industry too. The lower net profit
value in 2013 means that new projects of company not work efficiently even the
sales of products are high but due to increase the cost benefit of company reduced
(Dell, 2012-13).

Gross profit ratio
Gross profit ratio determine the operational profit of company and able to determine
the actual earning of company.
$ m $ m
2012 2013
Net Sales 14,483 14,514
Gross Profit/Loss 2,689 3,138
Gross Profit /Loss Margin % 18.5% 21.162%
In the ratio analysis the percentage of business operation ratio is more than the
dollar amount earned. The profit of Dell increased by increasing sales and to
increase the profit the gross ratio increase in 2013 as compare to 2012. A higher
profit means the business generate high level of revenue as compare to operating
expenses. It enables the business to produce the inventory and reduce the cost of
each item. In above profitability ratio of Dell the higher value as compare to
competitors’ profitability is high (Dell, 2012-13).
3.1.2 Liquidity ratios
Liquidity ratio tells about the working condition of company and how well company
cover short term debt by utilizing the assets of company.
According to investopedia, (2013)
“A class of financial matrices is used to determine the company’s ability to pay off its
debts obligation. Generally the higher the value of ratio, the larger the margin of
company that possess to cover the short term debt.”
Liquidity ratios of Dell Inc are current ratio and quick ratio to determine the current
efficiency of business.
Current ratio
$ m $ m
2012 2013
Current Assets 2,367 2,686
Current Liabilities 1,147 2,275
C.R= C Assets/C Liabilities 2.06:1 1.18:1
The higher ratio, the more liquid company is. The acceptable standard ratio of
current ratio is 2; it is comfortable ratio greater than 2 Means Company has not

enough project to invest for future ratios and less ratio from 2 mean that company
has no enough assets to fulfilled current obligation of company.
In Dell Inc the ratio of 2012 is more than 2 which is not suitable for company to get
return in near future. The current ratio is efficiently facilitating the financial need of
company that indicate the properly managed working capital in company (Meyer,
2002).
Quick ratio
$ m $ m
2012 2013
Quick Assets 1,726 2,539
Current Liabilities 1,147 2,275
Q.R= Q Assets/C Liabilities 1.50 1.12
In the above ratios analysis Dell Inc is in worst position in 2013 than 2012. The
higher the quick ratio the better will be company position. The standard ratio of quick
is 1 but in Dell the company get 1.12 and 1.5 in 2013 and 2012 respectively so that
more ratios shows company has few more assets than current liability and is a good
indicator for project managers. The Dell’s financial position is strong enough
because liabilities have positive impact on the financial position (Meyer, 2002).
3.1.3 Efficiency ratios
According to investopedia, (2013)
“The efficiency ratio can be calculated the turnover of receivables, the repayment of
liabilities the quantity and usage of equity and general use of inventory and
machinery”.
The efficiencies ratios of company are accounting receivable ratio and inventory
ratio.
Account receivable ratio
$ m $ m
2012 2013
Net Sales 14,483 14,514
Accounts Receivables 676 689
ARCP= Avg Acc Rec/Annual sales ÷ 365 17 days 21 days

When accountable are collected from debtors these outstanding accounts will be
received after a specific interval of time. The comparison of sales and activity on
collecting the variables from customers are expressed as an average and number of
days also calculated after which amount will be collected. In 2013 collection days of
Dell are low it means that data is collected after a specific interval and outstanding
variables or receivables to expressed the number of days before sales. This table
Dell collection period is low in 2103 means that and business is available funds on
time before purpose of receivables.
Inventory collection period
$ m $ m
2012 2013
Purchases 2,998 2,990
Inventory 624 146
IHP= Avg.Inventory/C.G.S × 365 19 days 20 days
The inventory holding period of Dell must be low that shown in the above table.
Financial performance of 2012 is better as compare to performance in 2013 because
the ratios are calculated based on investment and time period required for quantity
usage and include other machinery too (Gray, 1995).
The Dell can be performed well and efficiently as compare to their competitors and
ratios related to that shows the turnover efficiency of company. Dell’s efficiency
shows the improvement and increase the profitability of company by reducing the
cost (Gray, 1995).
3.2 Critically evaluate the performance of strategic decision making
analyse business information to make the substitute about improving
business performance.
Manager of Dell need all activities that helps to control processes of organization.
The manager [perform crucial role in managing the activities and sure to make the
plan that properly implemented in business. Strategic planning is the managerial and
financial operations control the planning process that helps to develop the plan and
control new projects of Dell (Gray, 1995). The ratios calculate in 3.1 shows the
performance of Dell and able to perform well in business management strategies

and show the liquidity ratio and leverage position of company. If company show
higher ratio of debt to equity it means that Dell shows stability in the behaviours of
company and grow in proper manners. The strategic decision making process of
company helps to guide the employees and collect the data for strategic decision
making. To collect the information and organized the interpretation process to
analyse the performance of industry in relation to project in which company invested.
The purpose of company is to ensure the time and neutral information to perform
well in the business and make the policies to reduce expenditures (White, 1986).
Following are the appraisal planning process steps as
 To get opportunities and evaluate the information to articulate the business
 Helps to evaluate the programmes and planned the programmes properly
 Provide the platform to managed plan and performance of report to engage
the strategic planning process.
 Communicate the building plan and evaluate needs
 Evaluate the available information
Before launching the product into market it is important to prepare a prototype in
relation to understand the Dell new item services and demand from customers too.
Dell management able to identify ideal location in the variety of configurations and
digital staff of doing business model and rearrange the process to continues staff to
buy (White, 1986).
Task 4: Understand how to use management accounting method to
manage resources effectively
4.1 Appraise methods by which financial resources are allocated,
managed and controlled. Analyse the budget and budget out turns
To obtained the process of measuring the Dell performance and requirement that
able to create the measures and find the internal and external sources of managers.
These services measure the impact of low budget and goals to achieve in Dell and
number of programmes are able to give properly stated goals and efforts to carry out
the analysis. In decision making process managers are able to manage change in
Dell organization and assess the operational and financial performance by strategic
management plan. The finances and financial appraisal Dell allocated to managed
and control appraisal methods in variance and budgetary process to control and
managed the business (Simon, 1955).

Financial and budgetary control:
Managers need to control the organization that managed the process of keeping
plan and necessary to control the actions that track heating the central tools to
ensure the planning and experimental sales are linking the expectations. The
financial position of Dell formulates the budget and creates the financial control to
plan income properly and operate the sales that are expected in business (Cameron,
2007).
Variance analysis
The difference between estimated budget and actual budget is called variance. The
variance is favourable when income is higher than expectation and expenses are
less than expectations. Dell manager use variance analysis tool to get the result
favourable and increase the profit from estimated budget process. Control is the
process that managed the business track and monitor to control the financial issues
to develop the continuous intervals (Stake, 1995).
4.2 Systematically analyse costing report and compare the
organizational performance against the cost and budgets
Determine the cost of project which would be launched in near future and report
them into similar process to get analysis and create the proper budget that may be
estimated and measure the effectiveness of project. Cost allocation is a simple
process to develop the program and basically setup the system to allow the
programmes and managed the process effectively. This information tools are needed
to control the process effectively and manage analysis to control the cost and
manage business properly. Planning and budgeting is a special function to produce
the product and prepare the equipments and analyse the financial position of Dell
and prepare the budget by following ways (Litz, 1996). Following are the process of
managing budgeting as
 Prepare the goal of new project
 Analyse the resources to achieve the goals of organization
 Negotiate budget in all departments of Dell.

 Improve productivity
 Tracking process and estimate the proper budget
4.3 Examine actions to be taken in response to costing and budgetary
information
The budgetary information is the process of preparing the budgets and plans the
new project properly and it is important to get the objects and then monitor the
performance of organization. The difference between actual and ideal position to be
corrected the measures and actions that should be taken. Budgetary performance to
generate the expenses that possible for majority companies that are working in the
different levels of resources and focused on the income and other resources that
able to perform well in business (Gray, 1995).
Conclusion
On the basis of above discussion it is concluded that Dell is performing efficiently but
due to some new projects profitability of company reduces. Core competencies
enhanced by enhancing the performance of finance in market and being able to
perform well in business. Different strategies opt by Dell Inc by utilizing internal and
external sources and budget also an important tool of managing business
performance properly.

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References
A. H. Russell. Cash Flows in Networks. Management Science, 16(1970), pp 357-
373
Bower, J. L. (1982) “Business policy in the 1980‟s”. Academy of Management Revie,
Vol 7 No. 2 (1982) 630-638.
C.S. Clark and S.E. Krentz, “Avoiding the Pitfalls of Strategic Planning,” Healthcare
Financial Management, 60, no. 11 (2004): 63–68.
D. Abell, Defining the Business: The Starting Point of Strategic Planning, (New
Jersey: Prentice-Hall, 1980).
Dell’s financial statement, (2012-2013) retrieved from
http://i.dell.com/sites/doccontent/corporate/secure/en/Documents/DellInc_10-
Q_2FY2014.pdf
Foss, N. J. (2009). “Alternative research strategies in the knowledge movement:
from macro bias to micro-foundations and multi-level explanation” Invited paper,
European Management Review. January 14, 2009.
Hoskisson, R., Hitt, M., Ireland, R., & Harrison, J. (2011). Competing for
Advantage (2nd ed.). Mason, OH: South-Western Cengage Learning.
Meyer, A. D. (1991). “What is strategy's distinctive competence?” Journal of
Management, 17: 821-833.
The McGraw-Hill Companies. (1999). Dell Computer's Strategy. Retrieved Decemcer
14, 2013, from McGraw
Hill.com: http://www.mhhe.com/business/management/thompson/11e/case/dell
5.html
Reeves, M., & Deimler, M. (2011, July). Adaptability: The New Competitive
Advantage. 89(7).
S. M. Baroum and J. H. Patterson J. H. The development of cash flow weight
procedures for maximizing the net present value of a project’, Journal of Operations
Management.1996, 14(3), pp 209 27.

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Schendel, D. & Hofer, C. W. (1979). Strategic management. Boston: Little, Brown
Shook, C.L. (2008). Review of “Research Methodology in Strategy and
Management, Volume 1.” Organizational Research Methods. 11(4), 853-854.
Simon, H.A. (1955). “A Behavioral Model of Rational Choice,” Quarterly Journal of
Economics 69:99-118.
White, R. E. (1986). “Generic business strategies, organizational context and
performance: An empirical investigation.” Strategic Management Journal, 7: 217-
231.
ww.dell.com
http://www.investopedia.com/terms/l/liquidityratios.asp

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