Dell: Analyzing financial statement

Résumé du document

products, from desktop personal computers (PC) to peripherals. Founded in 1984 in Texas by then-student Michael Dell, the company was as of January 2012 the third largest PC vendor in the world . Conducting its business worldwide through numerous subsidiaries, Dell provides IT solutions and services delivered directly by Dell, through its famous feature of direct-sales model and configure-to-order approach manufacturing, establishing a direct link with the final customers. Dell also uses other distribution channels such as retailers, third-party solution providers, system integrator's, and third-party reseller's.

Its business segments are divided between: large enterprises, public (meaning educational institutions, government, health care…), small and medium business, consumer (meaning individuals).Dell's main activity consists of assembling PC components and parts manufactured by third-party suppliers, as is the majority of the client products sold under Dell's brand name. These suppliers provide Dell with all the necessary components such as: the motherboard, the graphic card, the screen, processors… Dell's manufacturing process consists of assembly, software installation and functional testing.

To ensure quality to the final customer, all components, parts, sub-assemblies and systems obtained from third-party suppliers must take a quality control test to assess their conformity with Dell's good manufacturing process.

Extraits

[...] What are the five or six most important factors for success in this business? Describe four or five key business risks related to the client's business and industry What notable accounting considerations are there for companies in this industry? What legal or regulatory matters are of concern for the company and its industry? Analyze the company's financial strength: 9 Profitability Ratios 9 Liquidity ratios 10 Activity ratios 11 Debt ratios 11 Market ratios 11 a. Assess the financial strength of the company? [...]

[...] The company invests a significant portion of their available fund in debt securities and other stock investments. Should their results be impaired, Dell's earning performance would suffer What notable accounting considerations are there for companies in this industry? According to the 10K we can say that the most critical accounting consideration relate to the GAAP standard. Indeed, it seems that the Generally Accepted Accounting Principles (GAAP) doesn't feet well with the company's will of explaining its strategy: use non-GAAP financial measures to supplement the financial information presented on a GAAP basis. [...]

[...] 12 b. How is the financial strength likely to change in the next year or so? 12 c. What is the quality of earnings? (i.e. How does the company compare with others in the industry?) After Analyzing the Financial Statements and Key Risks, please answer the following questions: 13 a. Would you but this company's stock? Why or Why Not? 13 b. Would you work for this company based upon its financial performance? Why or Why Not? 13 c. [...]

[...] The industry estimates indicate that in mature markets, the PC shipments will decline by in 2012. Dell faces a very strong competition. Acer, Apple, HP, Lenovo, etc Furthermore, in the European and Asian netbooks markets the company faces intense competition from Asustek. Also, in the smartphone segment, Dell competes with Apple, Research In Motion and HTC. Intense competition may affect the company's operating performance and market share in coming years. b. What are the five or six most important factors for success in this business? [...]

[...] and the importance of developing countries: U.S market is quite saturated. Emerging countries are the future business of this industry. Level of life growth in these countries will raise the demand. Manufactories have to position themselves on these markets to catch future consumer attention and build a strong brand identity Sales places' accessibility: Computers are a matter of quality and the high prices of those devices means a lot to the customers. Advices from experts and guidance in the act of buying are services that must be attached to the sales places. [...]