Dell's Working Capital
TABLE OF CONTENTS
Description Page #
Executive Summary 1
Introduction
Background
Purpose 2
Research and Analysis
Dell’s Competitive Advantage
Funding 52% Growth in 1996
Funding 50% Growth in 1997 3
Conclusion 5
Exhibits
Exhibit 1: Dell’s Annual Worldwide Sales Dollar Growth Versus Industry
Exhibit 2: DSI Comparison of Dell, IBM, and Compaq
Exhibit 3: Working Capital Financial Ratios for Dell
Exhibit 4: Percent of Dell Computer Systems Sales by Microprocessor
Exhibit 5: Profit & Loss Statements for Dell Computer Corporation
Exhibit 6: Balance Sheets for Dell Computer Corporation
Exhibit 7: Projected Balance Sheet of Dell Computer Corporation for 1996
Exhibit 8: Projected Balance Sheet of Dell Computer Corporation for 1997
Exhibit 9: Projected Profit and Loss Statement of Dell for 1997
Exhibit 10: Balance Sheet for Dell Computer Corporation, 1997
Exhibit 11: Profit & Loss Statement for Dell Computer Corporation, 1997 12
EXECUTIVE SUMMARY
This case study analysis of Dell’s Working Capital and its financial statements has been done to come up with a plan for the company to finance its future growth. Dell Computer Corporation has proven to be one of those companies that revolutionize an entire industry. They were the ones to introduce the Build-To-Order business model in the computer manufacturing sector, which gave them a tactical as well as competitive advantage over other companies. This new business model along with its working capital management and allocation of resources provided Dell with the opportunity for substantial growth in the 1990’s.
We forecasted, using the percent of sales method, for the financial statements of 1996 and 1997. The sales were increased by 52% for 1996 and 50% for 1997. The financial ratios of our pro forma balance sheets were calculated, and the information was used to figure out the external funds needed by Dell to finance its growth. As per the analysis there was no requirement of any external funds because
Description Page #
Executive Summary 1
Introduction
Background
Purpose 2
Research and Analysis
Dell’s Competitive Advantage
Funding 52% Growth in 1996
Funding 50% Growth in 1997 3
Conclusion 5
Exhibits
Exhibit 1: Dell’s Annual Worldwide Sales Dollar Growth Versus Industry
Exhibit 2: DSI Comparison of Dell, IBM, and Compaq
Exhibit 3: Working Capital Financial Ratios for Dell
Exhibit 4: Percent of Dell Computer Systems Sales by Microprocessor
Exhibit 5: Profit & Loss Statements for Dell Computer Corporation
Exhibit 6: Balance Sheets for Dell Computer Corporation
Exhibit 7: Projected Balance Sheet of Dell Computer Corporation for 1996
Exhibit 8: Projected Balance Sheet of Dell Computer Corporation for 1997
Exhibit 9: Projected Profit and Loss Statement of Dell for 1997
Exhibit 10: Balance Sheet for Dell Computer Corporation, 1997
Exhibit 11: Profit & Loss Statement for Dell Computer Corporation, 1997 12
EXECUTIVE SUMMARY
This case study analysis of Dell’s Working Capital and its financial statements has been done to come up with a plan for the company to finance its future growth. Dell Computer Corporation has proven to be one of those companies that revolutionize an entire industry. They were the ones to introduce the Build-To-Order business model in the computer manufacturing sector, which gave them a tactical as well as competitive advantage over other companies. This new business model along with its working capital management and allocation of resources provided Dell with the opportunity for substantial growth in the 1990’s.
We forecasted, using the percent of sales method, for the financial statements of 1996 and 1997. The sales were increased by 52% for 1996 and 50% for 1997. The financial ratios of our pro forma balance sheets were calculated, and the information was used to figure out the external funds needed by Dell to finance its growth. As per the analysis there was no requirement of any external funds because