Analyzing a Financial Statement Using Appropriate Ratios
Dell Computers engages in the design, development, manufacture, marketing, sale, and support of various computer systems and services to customers worldwide. It offers desktop computer systems and workstations; mobility products, such as notebook computers, mobile workstations, MP3 players, and handhelds; software and peripherals, projectors, software titles, notebook accessories, networking and wireless products, digital cameras, power adapters, scanners, servers and networking products; and storage devices.
Compute each of the ratios discussed in this chapter. If there is not sufficient information, state what is needed. If a ratio is not meaningful for this type of company, explain why.
DELL INC. Consolidated Statements of Financial Position (in millions) | ||
| February 2, | February 3, |
| 2007 | 2006 |
ASSETS |
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Current assets: |
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Cash and cash equivalents | $ 9,546 | $ 7,054 |
Short-term investments | 752 | 2,016 |
Accounts receivable, net | 4,622 | 4,082 |
Financing receivables, net | 1,530 | 1,366 |
Inventories | 660 | 588 |
Other | 2,829 | 2,688 |
Total current assets | 19,939 | 17,794 |
Property, plant, and equipment, net | 2,409 | 1,993 |
Investments | 2,147 | 2,686 |
Long-term financing receivables, net | 323 | 325 |
Other non-current assets | 817 | 454 |
Total assets | $ 25,635 | $ 23,252 |
LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Short-term borrowings | $ 188 | $ 65 |
Accounts payable | 10,430 | 9,868 |
Accrued and other | 7,173 | 6,240 |
Total current liabilities | 17,791 | 16,173 |
Long-term debt | 569 | 625 |
Other non-current liabilities | 2,836 | 2,407 |
Total liabilities | 21,196 | 19,205 |
Commitments and contingencies (Note 9) |
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Redeemable common stock and capital in excess of $.01 par value; 5 shares issued and outstanding (Note 5) | 111 | — |
Stockholders’ equity: |
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Preferred stock and capital in excess of $.01 par value; shares issued and outstanding: none | — | — |
Common stock and capital in excess of $.01 par value; shares authorized: 7,000; shares issued: 3,307 and 2,818, respectively;shares outstanding: 2,226 and 2,330, respectively | 10.107 | 9,503 |
Treasury stock at cost: 606 and 488 shares, respectively | (21,033) | (18,007) |
Retained earnings | 15,282 | 12,699 |
Accumulated other comprehensive loss | (28) | (101) |
Other | — | (47) |
Total stockholders’ equity | 4,328 | 4,047 |
Total liabilities and equity | $ 25,635 | $ 23,252 |
Consolidated Statements of Income (in millions) | |||
| Fiscal Year Ended | ||
| February 2, | February 3, | January 28, |
| 2007 | 2006 | 2005 |
Net revenue | $ 57,420 | $ 55,788 | $49,121 |
Cost of net revenue | 47,904 | 45,897 | 40,103 |
Gross profit | 9,516 | 9,891 | 9,018 |
Operating expenses: | |||
Selling, general, and administrative | 5,948 | 5,051 | 4,352 |
Research, development, and engineering | 498 | 458 | 460 |
Total operating expenses | 6,446 | 5,509 | 4.812 |
Operating income | 3,070 | 4,382 | 4,206 |
Investment and other income. Net | 275 | 226 | 197 |
Income before income taxes | 3,345 | 4,608 | 4,403 |
Income tax provision | 762 | 1,006 | 1,385 |
Net income | $ 2,583 | $ 3,602 | $ 3,018 |
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