Dell Inc.
Dell is a multinational information technology corporation based in Round Rock, Texas, Texas, United United States States, that develops, sells and supports computers and related products and services. In year 1984 Dell was founded and named after its founder Michael founder Michael Dell, Dell, who dropped out of school in order to provide his full-time for his newly started business, business, after getting about $300,000 from his family as a mean of expansion. Dell is one of the largest technological technological corporations in the world, with more than 96,000 employees worldwide. Dell has grown since its prime prime remarka remarkable ble mergers mergers and acquis acquisiti itions ons togeth together er with with Alienware (2006) and Perot Systems (2009). Dell Dell is cons consid ider ered ed as one one of the the worl world' d's s top top supp supplilier ers s of pers person onal al computers, where it offers a wide range of technology products for the consumer, education, enterprise, and government sectors. In addition to a full line of desktop d esktop and notebook PCs, Dell offers network servers, data storage systems, printers, Ethernet switches, and peripherals, such as displays and projectors. Dell is well known for its advance and innovations in supply chain management and a well established e-commerce. e-commerce. History :
Dell’s origin is back to the year of 1984; Michael Dell started the company while he was still still a student at University University of Texas at Austin at the time. time. Where the the begi beginn nnin ing g of his his busi busine ness ss was was from from his his dorm dorm-r -roo oom, m, sell sellin ing g IBM IBM PCPCcompatible comput computers ers built built from from stock stock compon component ents. s. The follow following ing year year after after foundation, Dell came out with their very first computer called the Turbo which had an eight-megahertz processor that was advertised for its systems in national computer magazines for sale directly to consumers. The company grossed more than $73 million in its first year of trading. Michael Dell initiated his trading through the idea of selling personal computer systems directly to customers.
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In 1988, the company changed its name from “PC’s Limited” to “Dell Computer Corporation” and began to expend globally. In 1996, Dell began its e-commerce e-commerce through selling computers via its web site, and in 2002, Dell started new product lines including televisions, televisions, handhelds, digital audio players, players, and printers. printers. Dell's first acquisition occurred in 1999 with the purchas purchase e of Conver ConvergeNe geNett Techno Technolog logies. ies. In 2003, 2003, the company company’s ’s brand brand was changed to "Dell Inc." in order to recognize the company's expansion beyond computers. In 2006, Dell acquired Alienware, Alienware, which introduced several new items to Dell Dell produ product cts. s. To preve prevent nt crosscross-ma marke rkett produ product cts, s, Dell Dell cont contin inues ues to run Alienware as a separate entity but still a wholly-owned subsidiary. On Sept Septem embe berr 21, 21, 2009, 2009, Dell Dell anno announ unced ced its its inte intent nt to acqu acquir ire e Perot Systems (based in Plano, Texas) Texas) in a reported $3.9 billion deal. Perot Systems brought applications applications development, development, systems integration, integration, and strategic strategic consulting consulting services through its operations in the U.S. and 10 other countries. In addition, it provided a variety of business process outsourcing services, including claims processing and call center operations.
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DELL INC Officers and Directors 1 Michael S. Dell- CEO, total compensation: $ 963,623.00, Mr. Dell is the
chairman of the Board since he founded the company in 1984, besides being the chief Executive Officer; Mr. Dell’s success is due to his: Leadership Experience, Founder, Chairman and CEO of Dell Industry Experience, Knowledge of new and existing technologies, Dell’s industry and Dell’s customers. Brian T. Gladden- CFO, total compensation: $ 2.59 million, Senior Vice
President, He is responsible for all aspects of Dell’s finance functions, including accounting, financial planning and analysis, tax, treasury, audit, information technology, and investor relations, and is also responsible for our global information systems and technology structure. Thomas W. Sweet- Chief Accounting Officer, Joined Dell in May 1997, and
has held a variety of executive-level roles in the company’s finance organization. Lawrence P. Tu- General Counsel, joined Dell as Senior Vice President,
General Counsel and Secretary in July 2004; he is responsible for overseeing Dell’s global legal, governmental affairs, and ethics and compliance departments. Erin Nelson- Senior Vice President , Ms. Nelson currently serves as Senior
Vice President and Chief Marketing Officer (CMO). In this role, she is responsible for customer relationship management, communications, brand strategy, core research and analytics, and overall marketing agency management.
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“DELL INC Officers & Directors” http://www.dailyfinance.com/company/dellinc/dell/nas/key-executives 3
Ronald G. Garriques- President, Divisional , Communication Solutions, and
total compensation: $ 8.05 million, Mr. Garriques focuses on bringing to market connected computing products and services through new channels of distribution, including telecommunications, cable, satellite and others. Stephen J. Felice- President, Divisional , total compensation: $ 5.57 million,
Mr. Felice leads the Dell organization that creates and delivers specific solutions and technology to more than 72 million small and medium-sized businesses globally and is responsible for Dell’s portfolio of consumer products, including desktops, notebooks, software and peripherals as well as product design and sales. Peter A. Altabef- President, Divisional, total compensation: $ 16.87 million,
joined Dell, after Dell’s acquisition of Perot Systems in November 2009, as President of Services, Dell’s global IT services and business solutions unit Bradley R. Anderson- Senior VP, Divisional, he is responsible for worldwide
engineering, design, development and marketing of Dell’s enterprise products, including servers, networking and storage systems. Jeffrey
W.
Clarke-
Vice
Chairman,
Operations and
Technology,
Divisional , he is responsible for worldwide engineering, design and
development of Dell’s business client products, including Dell OptiPlextm Desktops, Latitude Notebooks and Precision Workstations, and production of all company products worldwide. Paul D. Bell- president, Divisional , he is responsible for leading the teams
that help governments, education, healthcare and other public organizations make full use of information technology. Andrew C. Esparza- Senior VP, Divisional , he is responsible for driving the
strategy and supporting initiatives to attract, motivate, develop, and retain world-class talent in support of our business goals and objectives. He also has responsibility for corporate security and corporate responsibility on a worldwide basis.
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Steve Schuckenbrock- President, Divisional , he is leading the delivery of
innovative and globally consistent Dell solutions and services to the world’s largest corporate IT users. Products 1
Dell’s Business/Corporate class of products represent brand where the company advertises emphasizes long life-cycles, reliability, and serviceability. Such brands include:
OptiPlex (office desktop computer systems).
Vostro (office/small business desktop and notebook systems).
N-Series (desktop and notebook computers shipped with Linux or FreeDOS installed).
Latitude (business-focused notebooks).
Precision (workstation systems and high-performance notebooks).
PowerEdge (business servers).
PowerVault (direct-attach and network-attached storage).
PowerConnect (network switches).
Dell/EMC (storage area networks).
While Dell's Home Office/Consumer class of products emphasize the value, performance, and expandability. These brands include:
Inspiron (budget desktop and notebook computers).
Studio (mainstream desktop and laptop computers).
XPS (high-end desktop and notebook computers).
Studio XPS (high-end design-focus of XPS systems and extreme multimedia capability).
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Alienware (high-performance gaming systems).
Adamo (high-end luxury laptop).
“Dell” http://en.wikipedia.org/wiki/Dell
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Manufacturing:
Since dell started operating it was considered as a pioneer in the technology industry, especially in the personal computers. The company’s manufacturing strategy is to minimize the delay between the purchase and delivery of the product to the costumers that dell is manufacturing near to its costumers, which will reduce the inventory costs that is a signature of Dell. Dell's manufacturing process is in-house that it covers assembly, software installation, functional testing and quality control. Green initiatives:
Dell could be considered as the first company in the technology industry to establish a product-recycling goal and introduced its global consumer recyclingprogram in 2006. Dell was awarded the "Recycling Works" award for their producer responsibility, where it reported the recovery of more then 40,000 tons of IT equipments that will be recycled. Dell’s goal is to be the greenest technology company on the globe. It also introduce the expression of "The Re-Generation" referring to the desire of the population of all ages to make a difference through developing the global environment, while Dell is planning to be the leader in setting standards for the technology industry. Technical support:
Dell's Consumer division offers 24x7 phones based and online troubleshooting rather than only during business hours in certain markets such as the United States and Canada. Dell now also offers separate support options for IT staff and for non-IT professionals. Organization:
The board of directors is consists of eleven members who are responsible to run the company, this board of directors is being elected by the shareholders, and the corporate structure and management of Dell extends beyond the board
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of directors. The Dell Global Executive Management Committee sets strategic directions. Members in the board of directors: 1 Thomas W. Luce, III _ Director Senator Professor Samuel A. Nunn, Jr _ Director. Mr. Gerard J. Kleisterlee _ Director Shantanu Narayen _ Director Klaus S. Luft _ Director James W. Breyer _ Director Judy C. Lewent _ Director William H. Gary, III _ Director Mr. Alex J. Mandl _ Director Mr. Ross H. Perot, Jr _ Director, the Chairman of the Board of Perot Systems
Corporation from September 2004 until its acquisition by Dell on November 3, 2009. Donald J. Carty _ Director, former Vice Chairman and Chief Financial Officer of
Dell.
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“DELL INC Officers & Directors” http://www.dailyfinance.com/company/dellinc/dell/nas/key-executives
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Marketing:
Dell advertisements have appeared in several types of media including television, the Internet, magazines, catalogs and newspapers. Some of Dell Inc's marketing strategies include lowering prices at all times of the year, offering free bonus products (such as Dell printers), and offering free shipping in order to attract consumers, encourage more sales and to stave off competitors. Competition: 1
Dell's major competitors include Apple, Hewlett Packard (HP), Acer, Toshiba, Gateway, Sony, Asus, Lenovo, IBM, Samsung, and Sun Microsystems. Dell and its subsidiary, Alienware, compete in the enthusiast market against AVADirect, Falcon Northwest, VoodooPC (a subsidiary of HP). What set the company apart was not just its consumer-oriented focus but also its allowance for people to customize their computers during the ordering process. Because each computer was individually assembled, this was possible. 2 The industries Where Dell Inc. is competing include the personal computers, computer
networking
equipment,
computer
hardware,
servers
&
mainframes, workstations &thin clients, and finally routing & switching equipments. Competing in different industries imposes many risks on Dell Inc. where according to its goal Dell should be the leader in each industry and it has to keep competing different competitors in different industries.
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DELL INC Top Competitors http://www.dailyfinance.com/company/dell-inc/dell/nas/topcompetitors
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Dell Inc. (DELL) competitors http://finance.yahoo.com/q/co?s=dell
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DELL INC:
Income Statement1
Year over year, Dell Inc. has seen revenues fall from $61.1B to $52.9B. This along with an increase in the cost of goods sold expense has led to a reduction in the bottom line from $2.5B to $1.4B. Currency in
As of:
Feb 01
Jan 30
Jan 29
2008
2009
2010
61,133.0
61,101.0
52,902.0
61,133.0
61,101.0
52,902.0
Cost of Goods Sold
49,462.0
49,998.0
43,404.0
GROSS PROFIT
11,671.0
11,103.0
9,498.0
7,446.0
6,966.0
6,113.0
610.0
663.0
617.0
8,056.0
7,629.0
6,730.0
3,615.0
3,474.0
2,768.0
Interest Expense
-45.0
-93.0
-160.0
Interest and Investment Income
496.0
180.0
57.0
NET INTEREST EXPENSE
451.0
87.0
-103.0
Currency Exchange Gains (Loss)
-30.0
115.0
-59.0
Other Non-Operating Income (Expenses)
-48.0
-58.0
12.0
3,988.0
3,618.0
2,618.0
-92.0
-282.0
-596.0
Millions of U.S. Dollars Revenues TOTAL REVENUES
Selling General & Admin Expenses, Total R&D Expenses OTHER OPERATING EXPENSES, TOTAL OPERATING INCOME
EBT, EXCLUDING UNUSUAL ITEMS
Merger & Restructuring Charges 1
Dell Inc: Financial Statement http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx? Symbol=DELL&lstStatement=Income&stmtView=Ann 9
Gain (Loss) on Sale of Investments
14.0
-10.0
2.0
--
--
--
Other Unusual Items, Total
-83.0
-2.0
--
In Process R&D Expenses
-83.0
-2.0
--
3,827.0
3,324.0
2,024.0
880.0
846.0
591.0
2,947.0
2,478.0
1,433.0
2,947.0
2,478.0
1,433.0
2,947.0
2,478.0
1,433.0
2,947.0
2,478.0
1,433.0
Gain (Loss) on Sale of Assets
EBT, INCLUDING UNUSUAL ITEMS
Income Tax Expense Earnings from Continuing Operations NET INCOME NET INCOME TO COMMON INCLUDING EXTRA ITEMS NET INCOME TO COMMON EXCLUDING EXTRA ITEMS
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DELL INC: balance sheet 1
Although debt as a percent of total capital increased at Dell Inc. over the last fiscal year to 41.97%, it is still in-line with the Computers and Peripherals industry's norm. Additionally, there are enough liquid assets to satisfy current obligations. Accounts Receivable are typical for the industry, with 51.56 days worth of sales outstanding. Last, Dell Inc. is among the least efficient in its industry at managing inventories and has been consistently getting worse. At the most recent fiscal year end there were 8.04 days of this company's Cost of Goods Sold tied up in Inventories. Currency in
As of:
Feb 01
Jan 30
Jan 29
2008
2009
2010
7,764.0
8,352.0
10,635.0
208.0
740.0
373.0
7,972.0
9,092.0
11,008.0
7,693.0
6,443.0
8,543.0
7,693.0
6,443.0
8,543.0
1,180.0
867.0
1,051.0
Prepaid Expenses
370.0
447.0
539.0
Deferred Tax Assets, Current
596.0
499.0
444.0
Restricted Cash
294.0
213.0
147.0
1,775.0
2,590.0
2,513.0
19,880.0
20,151.0
24,245.0
Millions of U.S. Dollars Assets
Cash and Equivalents Short-Term Investments TOTAL CASH AND SHORT TERM INVESTMENTS
Accounts Receivable TOTAL RECEIVABLES
Inventory
Other Current Assets TOTAL CURRENT ASSETS 1
Dell Inc: Financial Statement http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx? Symbol=DELL&lstStatement=Balance&stmtView=Ann 11
Gross Property Plant and Equipment
4,614.0
4,510.0
4,652.0
Accumulated Depreciation
-1,946.0
-2,233.0
-2,471.0
2,668.0
2,277.0
2,181.0
Goodwill
1,648.0
1,737.0
4,074.0
Long-Term Investments
1,560.0
454.0
782.0
Accounts Receivable, Long Term
407.0
500.0
332.0
Deferred Tax Assets, Long Term
485.0
568.0
237.0
Other Intangibles
780.0
724.0
1,694.0
Other Long-Term Assets
133.0
89.0
107.0
27,561.0
26,500.0
33,652.0
Accounts Payable
11,492.0
8,309.0
11,373.0
Accrued Expenses
1,821.0
3,009.0
3,279.0
25.0
113.0
663.0
200.0
--
--
Current Income Taxes Payable
99.0
6.0
--
Other Current Liabilities, Total
2,403.0
721.0
605.0
Unearned Revenue, Current
2,486.0
2,701.0
3,040.0
18,526.0
14,859.0
18,960.0
362.0
1,898.0
3,417.0
2,774.0
3,000.0
3,029.0
NET PROPERTY PLANT AND EQUIPMENT
TOTAL ASSETS LIABILITIES & STOCKHOLDERS EQUITY
Short-Term Borrowings Current Portion of Long-Term Debt/Capital Lease
TOTAL CURRENT LIABILITIES
Long-Term Debt Unearned Revenue, Non-Current
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Other Non-Current Liabilities
2,164.0
2,472.0
2,605.0
23,826.0
22,229.0
28,011.0
Common Stock
10,589.0
11,189.0
11,472.0
Retained Earnings
18,199.0
20,677.0
22,110.0
Treasury Stock
-25,037.0
-27,904.0
-27,904.0
-16.0
309.0
-37.0
3,735.0
4,271.0
5,641.0
27,561.0
26,500.0
33,652.0
TOTAL LIABILITIES
Comprehensive Income and Other TOTAL STOCKHOLDERS EQUITY TOTAL LIABILITIES AND EQUITY
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DELL INC: cash flow 1
Currency in
As of:
Feb 01
Jan 30
Jan 29
2008
2009
2010
2,947.0
2,478.0
1,433.0
596.0
666.0
647.0
11.0
103.0
205.0
607.0
769.0
852.0
83.0
2.0
--
187.0
310.0
429.0
-1,086.0
480.0
-660.0
Change in Inventories
-498.0
309.0
-183.0
Change in Accounts Payable
837.0
-3,117.0
2,833.0
Change in Unearned Revenues
1,032.0
663.0
135.0
Change in Other Working Capital
-241.0
-421.0
-1,354.0
CASH FROM OPERATIONS
3,949.0
1,894.0
3,906.0
-831.0
-440.0
-367.0
--
44.0
16.0
-2,217.0
-176.0
-3,613.0
1,285.0
749.0
155.0
Millions of U.S. Dollars NET INCOME
Depreciation & Amortization Amortization of Goodwill and Intangible Assets DEPRECIATION & AMORTIZATION, TOTAL
Asset Writedown & Restructuring Costs Provision & Write-off of Bad Debts Change in Accounts Receivable
Capital Expenditure Sale of Property, Plant, and Equipment Cash Acquisitions Investments in Marketable & Equity Securities 1
Dell Inc: Financial Statement http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx? Symbol=DELL&lstStatement=CashFlow&stmtView=Ann
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CASH FROM INVESTING
-1,763.0
177.0
-3,809.0
Short-Term Debt Issued
--
100.0
76.0
Long-Term Debt Issued
66.0
1,519.0
2,058.0
66.0
1,619.0
2,134.0
Short Term Debt Repaid
-100.0
--
--
Long Term Debt Repaid
-165.0
-237.0
-122.0
TOTAL DEBT REPAID
-265.0
-237.0
-122.0
Issuance of Common Stock
136.0
79.0
2.0
-4,004.0
-2,867.0
--
-53.0
--
-2.0
-4,120.0
-1,406.0
2,012.0
152.0
-77.0
174.0
-1,782.0
588.0
2,283.0
TOTAL DEBT ISSUED
Repurchase of Common Stock Other Financing Activities CASH FROM FINANCING
Foreign Exchange Rate Adjustments NET CHANGE IN CASH
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FINANCIAL RATIOS: (DELL Inc.): A.
Liquidity Ratios:
1.
current Ratio= total current Assets / total current liabilities Years
2008
2009
2010
Calculation
19,880 / 18,526
20,151 / 14,859
24,245.0 / 18,960
s Results
1.07 times
1.36 times
1.28 times
2.
Quick Ratio = (total current Assets - Inventories) / total current
liabilities Years
2008
2009
2010
Calculation
(19,880-
(20,151 - 867) /
(24,245 - 1,051) /
s Results
1,180 ) / 18,526 1.01 times
14,859 1.3 times
18,960 1.2 times
3.
Net working capital = total current assets – total current liabilities
Years
2008
2009
2010
Calculation
19,880 - 18,526
20,151 - 14,859
24,245 - 18,960
s Results
$ 1,354
$ 5,292
$ 5,285
The liquidity of a company is a mean of determining its ability to pay off its short-terms debts obligations. Generally, the higher the value of the ratio, the larger the margin of safety that the company possesses to cover short-term debts, a high current and quick ratios involves less risk of the firm experiencing a cash shortfall in the near future. Dell Inc. increased its liquidity ratio from 2008 to 2009, then it decr eased with a little fraction from 2009 to 2010, this fraction doesn’t affect its ability to pay off its short-terms debts obligation.
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B. Activity Ratio: 1.
Average collection period = (Accounts receivable / sales) * 360 Years
2008
2009
2010
Calculation
(7,693 / 61,133 )*
(6,443 / 61,101 )*
(8,543 / 52,902 )*
s Results
360 45 days
360 38 days
360 58 days
2.
Average payment period = (Accounts payable / purchases) * 360 Years
2008
2009
2010
Calculation
(11,492 / 1,180)*
(8,309 / 867)*
(11,373 / 1,051)*
s Results
360 3,506 days
360 3,450 days
360 3,896 days
3.
4.
Inventory turnover = Cost Of Goods Sold / Inventory Years
2008
2009
2010
Calculations
49,462 / 1,180
49,998 / 867
43,404 / 1,051
Results
42 times
57.7 times
41.3 times
Assets turnover = Sales / total Assets Years
2008
2009
2010
Calculation
61,133 / 27,561
61,101 / 26,500
52,902 / 33,652
s Results
2.22 times
2.3 times
1.6 times
The activity ratios aim is to measure a firm's ability to convert different accounts within their balance sheets into cash or sales; dell’s average collection period in 2010 increased where the best situation when it is decreased. While the average payment period increased in 2010 that dell is able to delay its obligation in order to benefits of its cash in hand. And in terms of dell’s Inventory and Assets, the ratios of inventory and assets turnover show an increase from year 2008 to 2009 then a decrease in year 2010,
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where both ratios should increase that they are measuring the company’s efficiency to generate sales through making use of its assets and inventory.
C.
Leverage Ratios
1. Debt to total assets = total debts / total assets Years
2008
2009
2010
Calculation
562 / 27,561
1,898 / 26,500
3,417 / 33,652
s Results
2.04 %
7.16 %
10.15 %
2. Debt to equity ratio = total debt / total stockholder’s equity Years
2008
2009
2010
Calculations
562 / 3,735
1,898 / 4,271
3,417 / 5,641
Results
15.05 %
44.4 %
60.6%
The leverage ratios are to measure the company’s ability to meet its financial obligations or in other words it is the company's methods of financing, through indicating the extent to which the company relies on debt as a source of financing. Dell Inc. financing through debt has been increasing since 2008 until it reached 60% of its equity financed through debt, which has a critical outcomes on the risk and return of its shares.
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D.
Profitability Ratios:
The profitability ratios assess a company’s ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time. For most of these ratios, having a higher value compared to a competitor's ratio or the same ratio from a previous period is indicative that the company is doing well.
1.
Gross profit margin = Gross profit / sale Years
2008
2009
2010
Calculation
11,671 / 61,133
11,103 / 61,101
9,498 / 52,902
s Results
19.09 %
18.17 %
17.95 %
Dell’s Gross profit margin ratio shows a decrease in its ability to sell its products with a price more than the cost of producing this product
2.
Operating profit margin = operating profit / sale Years
2008
2009
2010
Calculation
3,615 / 61,133
3,474 / 61,101
2,768 / 52,902
s Results
5.91 %
5.7 %
5.2 %
The operating profit margin ratio reveals a decrease on how much dell Inc. earns before interest and taxes from each dollar of sales.
3.
Net profit margin = net profit after tax / sale Years
2008
2009
2010
Calculations
2,947 / 61,133
2,478 / 61,101
1,433 / 52,902
Results
4.8 %
4.06 %
2.7 %
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The net profit margin ratio shows the fraction of each dollar in revenue that is available for equity holders after Dell Inc. pays its expenses plus interest and tax. In 2010, the net profit margin indicates a major decrease almost the half of revenues available for the shareholders.
4.
Return on assets (ROA) = net profit after tax / total assets Years
2008
2009
2010
Calculation
2,947 / 27,561
2,478 / 26,500
1,433 / 33,652
s Results
10.7 %
9.3 %
4.2 %
The return on assets ratio expresses the firm’s net income as a return on the book value of its assets; in 2010 the ROA decreased with a remarkable fraction might be due to management’s inefficient use of its assets to generate earnings.
5.
Return on equity (ROE) = net profit after tax / total equity Years
2008
2009
2010
Calculation
2,947 / 23,826
2,478 / 22,229
1,433 / 28,011
s Results
12.4 %
11.15 %
5.1 %
The return on equity ratio expresses the firm’s net income as a return on the book value of its equity, also in 2010 the ROE decreased with a remarkable fraction, this is might be due to decrease amount of money invested by shareholders.
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E.
Valuation Ratios:
The Valuation ratios estimate the attractiveness of a potential or existing investment and get an idea of its valuation.
1.
Market Capitalization = Number of shares outstanding 1 * Market price per share
Years
2008
2009
2010
Calculation
2,060 * 19.90
1,944 * 9.50
1,957 * 13.55
s Results
40,994
18,468
26,517.3
The market capitalization ratio calculate the total market value of a firm’s equity, in 2009 there was a huge decrease in the market capitalization, then it increase by a fair amount in 2010, the reason behind those changes might be due to the change in the share prices over the three years.
2.
Price Earnings Ratio ( P/E) = Market capitalization / Net Income
Years
2008
2009
2010
Calculation
40994 / 2947
18,468 / 2478
26517.35 / 1433
s Results
13.9
7.45
18.5
The price earnings ratio measures the value of equity to the firm’s earnings, after analyzing the P/E ratio, a decrease and increase could be noticed due to the changes in the market capitalization.
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Dell Inc: Financial Statement http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx? Symbol=DELL&lstStatement=Balance&stmtView=Ann 21
3. Market-to-Book Ratios= market value of equity / book value of equity Years
2008
2009
2010
Calculations
40,994 / 3735
18,468 / 4271
26,517.35 / 5641
Results
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4.3
4.7
This ratio is used to evaluate the firm; it indicates the value of the firm’s assets when put to use where it must exceeds the historical costs of those assets. This ratio provides a feedback on the market’s assessment of the management’s decisions. Evaluating Dell’s book value to its market value we could observe the decline from year 2008 to 2009 with a large amount, this might be caused by the decrease of the amount of shareholders’ capital invested. Then in 2010 the market-to-book ratio increased by 0.4. 4. Enterprise Value to EBITDA =market value of equity + Debt - cash Years
2008
2009
2010
Calculation
40994 + 562 - 7764
18,468 + 1898 -
26517.35 + 3417 -
33,782
8352 12,014
10635 19,299.35
s Results
The enterprise value to EBITDA assess the value of the underlying Dell’s assets, unencumbered by debt and separate from any cash and marketable securities, where the enterprise value of dell decreased from year 2008 to year 2009, then a slight increase in 2010. 5. EPS = Net Income / Shares Outstanding Years
2008
2009
2010
Calculation
2,947 / 2,060
2,478 / 1,944
1,433 / 1,957
s Results
1.4
1.3
0.7
The net income represents the total earnings of the firm’s equity holders, where the earning per share (EPS) provides a general idea about the net income
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available for shareholders. Dell EPS for 2009 decreased compared to 2008, while in 2010 it continued to decrease but with a huge fraction.
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Historical prices : 1
Prices Date
Open
High
Low
Close
Average Volume
Jan 31, 2008
20.12
21.18
18.87
19.90
34,829,400
Mar 3, 2008
19.84
20.81
18.91
19.92
25,594,400
Jun 2, 2008
22.99
24.66
21.87
21.88
30,084,700
Sep 2, 2008
21.91
21.98
14.50
16.48
43,861,400
Dec 1, 2008
10.94
12.29
9.74
10.24
19,880,400
Jan 2, 2009
10.31
11.43
9.45
9.50
27,315,100
Mar 2, 2009
8.53
10.86
8.00
9.48
31,953,100
Jun 1, 2009
11.70
13.96
11.45
13.73
26,601,100
Sep 1, 2009
15.72
17.13
15.05
15.26
26,545,400
Dec 1, 2009
14.13
14.81
12.74
14.36
29,521,800
Jan 4, 2010
14.50
15.20
12.75
12.90
26,866,200
Mar 1, 2010
13.35
15.25
13.28
15.02
25,643,200
Jun 1, 2010
13.23
14.28
12.00
12.06
32,606,800
Sep 1, 2010
11.92
13.17
11.79
12.97
26,593,500
Dec 1, 2010
13.47
14.02
13.20
13.55
18,745,200
After observing Dell’s Inc. stock prices over the past three years, we could conclude that there were ups and downs in the stock prices, especially a noticeable drop in the prices during 2009, and then it increased in 2010 but didn’t reach the prices of 2008.
Dell Inc. (DELL) Historical Prices, http://finance.yahoo.com/q/hp? s=DELL&a=01&b=1&c=2008&d=11&e=31&f=2010&g=m 1
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Industry average:
1
Description 1 Day Price Change % Sector: Technology Industry: Personal Computers
Apple Inc. (AAPL) Dell Inc. (DELL)
Market
P/E
Cap 0.49 77871.4B 0.30 325.1B Companies 0.30 298.3B 0.29 26.8B
ROE %
Long-Term
Price to
Debt to
Book
Equity
Value
Sector: Technology
57.06
8.42
Industry: Personal Computers
88.07 6.35 Companies NA 6.23 88.07 3.93
Description
Apple Inc. (AAPL) Dell Inc. (DELL)
Div. Yield
50.97 22.20
% 10.87 25.50
21.46 13.35
35.28 34.50
Net Profit Margin % (mrq)
1.00 0.00 0.00 NA
Price to Free Cash Flow (mrq)
5.81
-280.72
11.40
16.90
21.18 5.34
80.24 205.31
Industry Browser - Technology - Personal Computers - Company List, http://biz.yahoo.com/p/811conameu.html 1
25
Conclusion
Comparison between both companies according to their ratios and
interpret the difference.
Analyze the performance of both company
The market-to-book ratio indicates which is “growth firm”( low
market-to-book ratio) and which is “value firm”(high market-to-book ratio)
Enterprise Value to EBITDA: Determine how the value of each
company changed over time period.
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