Problem

Using Financial Reports: Analyzing the Balance SheetRecent balance sheets of Dell. Inc., a...

Using Financial Reports: Analyzing the Balance Sheet

Recent balance sheets of Dell. Inc., a leading producer and marketer of a broad range of personal computers, mobility products, software, and related tools and serv ices, are provided.

Required:

1. Is Dell a coiporation. sole proprietorship, or partnership? Explain the basis of your answer.

2. Use the company’s balance sheet (consolidated statement of financial position) to determine the amounts in the accounting equation (A=L + SE) at the end of the must recent year.

3. Calculate the company’s current ratio on January 30, 2009. Interpret the ratio that you calculated. What other information would make your interpretation more useful?

4. Give the journal entry the company will make in 2009 when it pays its fiscal year 2008 accounts payable (fiscal year 2008 ends on January 30, 2009).

5. Does the company appear to have been profitable over its years in business? On what account are you basing your answer? Assuming no dividends were paid, how much was net income (or net loss) in the most recent year? If it is impossible to determine without an income statement, state so.

DELL INC.

Consolidated Statements of Financial Position

(dollars in millions)

 

January 30, 2009

February 1,2008

ASSETS

 

 

Current assets

 

 

Cash and cash equivalents

$ 8,352

$ 7,764

Short-term investments

740

208

Accounts receivable

6,443

7,693

Inventories

867

1.180

Other

3,749

3.035

Total current assets

20,151

19.880

Property, plant and equipment, net

2,277

2,668

Investments

454

1.560

Intangibles

2,461

2,428

Other noncurrent assets

1,157

1,025

 

$ 26,500

$ 27,561

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Short-term debt

$ 113

$ 225

Accounts payable

8.309

11,492

Accrued and other liabilities

3.788

4,323

Deferred service revenue

2.649

2.486

Total current liabilities

14.859

18,526

Long-term debt

1.898

362

Long-term deferred service revenue

3.000

2.774

Other noncurrent liabilities

2.472

2.070

Total liabilities

22 229

23.732

Stockholders’ equity

 

 

Contributed capital

11.189

10,589

Retained earnings

20.677

18.199

Other

(27.595)

(24.959)

Total stockholders’ equity

4.271

3.829

 

$ 26.500

$ 27.561

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