Dell Inc. - Financial Ratio Calculations
Not what you're looking for?
I need to add a "financial analysis" of liquidity and profit ability ratios to my final (about DELL Inc.)- Could you help me with this?
Purchase this Solution
Solution Summary
This solution is comprised of a detailed explanation to answer the request of the assignment in text file.
Solution Preview
Please see the attached file.
Liquidity Ratios:
Working capital
working capital is current assets minus current liabilities
For the year 2005 working capital = 17,706,000 - 15,927,000 = 1,779,000
For the year 2004 working capital = 16,897,000 - 14,136,000 = 2,761,000
Current ratio
For the year 2005 current ratio = current assets/current liabilities
= 17,706,000/15,927,000
= 1.11
For the year 2004 current ratio = current assets/current liabilities
= 16,897,000/14,136,000
= 1.20
Profitability Ratios:
Profit margin
Asset turnover
Return on assets
Debt to equity ratio
Return on equity
For the year 2005
Profit margin = Net Income/Net Sales
= 3,572,000/55,980,000
= 0.0638
Asset turnover = Net Sales/Total Average Assets
= 55,980,000/[(23,109,000 + 23,215,000)/2]
= 2.42
Return on assets = Net Income/Total Average Assets
= 3,572,000/[(23,109,000 + 23,215,000)/2]
= 0.15
Debt to equity ratio = Total Liabilities/Owner Equity
= 18,980,000/4,129,000
= 4.60
Return on equity = Net Income/Average Owner Equity
= 3,572,000/[(4,129,000 + 6,485,000)/2]
= 0.67
For the year 2004
Profit margin = Net Income/Net Sales
= 3,043,000/49,205,000
= 0.0618
Asset turnover = Net Sales/Total Average Assets
= 49,205,000/[(23,215,000 + 19,311,000)/2]
= 2.31
Return on assets = Net Income/Total Average Assets
= 3,043,000/[(23,215,000 + 19,311,000)/2]
= 0.14
Debt to equity ratio = Total Liabilities/Owner Equity
= 16,730,000/6,485,000
= 2.58
Return on equity = Net Income/Average Owner Equity
= 3,043,000/[(6,485,000 + 6,280,000)/2]
= 0.48
Year 2005 Year 2004
working capital 1,779,000 2,761,000
current ratio 1.11 1.20
Profit margin 0.0638 0.0618
Asset turnover 2.42 2.31
Return on assets 0.15 0.14
Debt to equity ratio 4.60 2.58
Return on equity 0.67 0.48
From the ...
Purchase this Solution
Free BrainMass Quizzes
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.
Managing the Older Worker
This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce
Basics of corporate finance
These questions will test you on your knowledge of finance.
Understanding the Accounting Equation
These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.
Learning Lean
This quiz will help you understand the basic concepts of Lean.