Dell Inc: What is the primary cause of the decline in ROE from 2012 to 2013? Drill down as far as you can with the analysis.

ACC 519: Dell Inc: What is the primary cause of the decline in ROE from 2012 to 2013

Dell Ratio Analysis Assignment

  1. What is the primary cause of the decline in ROE from 2012 to 2013? Drill down as far as you can with the analysis.
  2. What is more profitable:  product sales or services?
  3. Do you have any concerns with Dell’s current ratio?
  4. If Dell could issue debt at a 5% coupon rate, could it increase its returns to shareholders by including more debt in its capital structure?

You must complete this assignment in excel!

DELL INC
 February 3,
2013
February 3,
2012
January 28,
2011
ASSETS
 Fiscal Year EndedCurrent assets:  
 February 3,
2013
February 3,
2012
January 28,
2011
Cash and cash equivalents12,56913,85213,913
Net revenue:  Short-term investments208966452
Products44,74449,90650,002Accounts receivable, net6,6296,4766,493
Services, including software related12,19612,16511,492Short-term financing receivables, net32133,3273,643
Total net revenue56,94062,07161,494Inventories, net1,3821,4041,301
Cost of net revenue:  Other current assets3,9673,4233,219
Products36,68339,68942,068Total current assets27,96829,44829,021
Services, including software related8,0718,5718,030Property, plant, and equipment, net21262,1241,953
Total cost of net revenue44,75448,26050,098Long-term investments2,5653,404704
Gross margin12,18613,81111,396Long-term financing receivables, net1,3491,372799
Operating expenses:  Goodwill9,3045,8384,365
Selling, general, and administrative8,1028,5247,302Purchased intangible assets, net33741,8571,495
Research, development, and engineering1072856661Other non-current assets854490262
Total operating expenses9,1749,3807,963Total assets47,54044,53338,599
Operating income3,0124,4313,433   
Interest expense and other, net(171)(191)(83)LIABILITIES AND STOCKHOLDERS  EQUITY
Income before income taxes2,8414,2403,350Current liabilities:  
Income tax provision469748715Short-term debt3,8432,867851
Net income2,3723,4922,635Accounts payable11,57911,65611,293
Earnings per share:  Accrued and other36443,9344,181
Basic1.361.901.36Short-term deferred services revenue4,3733,5443,158
Diluted1.351.881.35Total current liabilities23,43922,00119,483
Weighted-average shares outstanding:  Long-term debt5,2426,3875,146
Basic1,7451,8381,944Long-term deferred services revenue39713,8363,518
Diluted1,7551,8531,955Other non-current liabilities4,1873,3922,686
Total liabilities36,83935,61630,833
Commitments and contingencies (Note 10)
Stockholders  equity:  
Common stock and capital in excess of $.01 par value; shares authorized: 7,000; shares issued: 3,390 and 3,369, respectively; shares outstanding: 1,761 and 1,918, respectively12,55412,18711,797
Treasury stock at cost: 1,154 and 976 shares, respectively(32,145)(31,445)(28,704)
Retained earnings30,33028,23624,744
Accumulated other comprehensive loss(59)(61)(71)
Total Dell Stockholder’s Equity10,680
Non-controlling interest21
Total stockholders  equity10,7018,9177,766
Total liabilities and stockholders  equity47,54044,53338,599
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