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Dell v Apple: Financial Ratio Comparison

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Need assistance with Q 9, 10, 11 and B.3.

Prepare an analysis of the two companies selected ( Apple & Dell). In your analysis evaluate their financial performance using trend and financial ratio analysis, and analyze their most recent statements of cash flows. You may include charts summarizing ratio and cash flow findings but need to analyze and evaluate that data in essay form.

a. Evaluate each firm's financial performance for the two most recent years available by (1) performing financial ratio analysis using the University of Phoenix Microsoft® Excel® Ratio Analysis Worksheet, (2) performing trend analysis on those financial ratios, and (3) comparing and contrasting the findings in essay form. Be sure to include a citation and reference the source of your financial information. A copy of the financial information can be attached, a URL provided, or re-created. Your analysis should include at least eight from the following list:
1) Current ratio
2) Quick ratio
3) Average collection period (days sales outstanding)
4) Inventory turnover ratio (if applicable)
5) Times interest earned
6) Debt-to-equity ratio
7) Net profit margin
8) Return on equity
9) Total asset turnover HELP THIS ONE
10) Return on assets HELP THIS ONE
11) Price-earnings ratio HELP THIS ONE
b. For both of these years and companies:
1) Identify the amount of cash generated or used from each of operating, investing, and financing activities,
2) Identify what business changes occurred altering the company's use of cash from one year to the next
3) Discuss whether or not the company is generating cash in a sustainable manner, HELP THIS ONE
4) Make recommendations as to how the company could better manage its cash flows in the future.

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Solution Preview

I have attached a formatted MS Excel spread sheet which contains an analysis of the ratios that you requested, the information posted below, as well as reference sources for the cited material.

Question 9: Over the past two years, Dell has done a more effective job of managing it's total asset turnover (ratio) than Apple. During this time period (2006 to 2007), Dell's total asset turnover ratio remained basically stable at 2.240 for 2006 and 2.218 for the fiscal year 2007.
Apple's total asset ratio on the other hand, decreased during it's past two years of operation, from 1.123 in 2006 to 0.947 in 2007. Which means that during the past two years of operation, Dell has bee far more effective at utilizing each dollar of its assets to generate an increased level of sales.

Question 10: Return on assets is an indicator of how ...

Solution Summary

Prepare an analysis of the two companies selected ( Apple & Dell). In your analysis evaluate their financial performance using trend and financial ratio analysis, and analyze their most recent statements of cash flows.

See Also This Related BrainMass Solution

Financial Reports, Cost Behavior, Break-even Analysis, Performance Measures

You must choose a publicly held company. Indicate the name of the company, a link to the homepage of the company and links to at least two other sources of financial information. Also, comment on your interest in the company and how one can expect to benefit from the analysis of this particular company.

Part I- Understanding Financial Reports
Assess the financial position of the company company in comparison to one of its competitors. The emphasis is on cash flow for this analysis.
1. Compute the return on assets, profit margin and asset utilization rate for your company and its competitor.
2. Assess your company's competitive financial position.
3. Compute the free cash flow for your company and its competitor.
4. Assess your company's relative cash position and comment on its receipt and use of cash during the year.

Part II- Cost Behavior
Review financial statements for two years. Make a comparison of
â?¢ revenues;
â?¢ cost of goods sold;
â?¢ accounts receivable; and
â?¢ accounts payable
â?¢ inventory
...for the two years and show trends for all five categories for each company. Keeping the case analysis in mind, discuss and interpret the changes over the three year period. Which company is the best performer and why? How is this information useful to you from a managerial perspective? Explain your reasoning and support with the numbers you have pulled out for the comparison above. Don't forget to comment on the interaction of the balance sheet and income statement.

Part III- Break-Even Analysis and Planning
Prepare a flexible budget for next year.
Limit limiting your budgeting to the absorption approach.
Set up the flexible budget showing three different growth rates. Use the financial statements and do research to determine growth trends. Explain your estimates and prepare a flexible budget showing the low, the average, and the high revenues and adjust all other line items in the income statement to reflect the revised revenue assumptions.
â?¢ What is the growth rate in sales for the past three years?
â?¢ Are revenues and expenses growing at the same rate? What was the experience in the past few years?
â?¢ What is the current growth rate in the economy?
â?¢ How are the competitors doing?
â?¢ Current interest rates and tax burdens.
Discuss the implications of the information after you have completed the flexible budget.
â?¢ How does the flexible budget differ from a static budget?
â?¢ Budgets are used for planning and control. Discuss how you can use the information derived for these two purposes?
â?¢ Comment on using this information for performance evaluations.

Part IV-
Lastly, regarding operating leverate, ROI, EVA, and pick another performance measure of your choice. You will note that there are variations in the computations of a particular measurement. Consistency in application is the key.
Use information from the latest financial statement for the same company to compute the measurements you researched.
Reflect on the advantages and disadvantages of these performance measures. Choose your preferred measure and explain your rationale.

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