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# Dell Inc. - Financial Ratio Calculations

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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?

#### Solution Preview

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 ...

#### Solution Summary

This solution is comprised of a detailed explanation to answer the request of the assignment in text file.

\$2.19

## The financial information for Dell Inc.

Following is the financial information for Dell Inc.
2005 2004
Revenue \$49,205 \$41,444
Net Incomes 3,043 2,645
Total Assets 23,215 19,311
Shareholder's Equity 6,485 6,280
Cash Flow From Operations 5,310 3,670
Basic Earnings per Share 1.21 1.03
Book Value Per Share 2.61 2.46
Closing Stock Price 33.44 23.86

18. What is Dell's Profit margin for 2004?
A) 6.27%
B) 6.18%
C) 6.38%
D) 6.86%

19. What is Dell's Profit margin for 2005?
A) 6.27%
B) 6.18%
C) 6.38%
D) 6.86%

20. What is Dells P/E ratio for 2005?
A) 27.63
B) 12.81
C) 23.65
D) 9.70

21. What is Dell's Assets Turnover for 2005?
A) 2.12
B) 3.58
C) 3.65
D) 2.31

22. Given the following information, calculate the inventory turnover for ABC Co. for 2005
(Pick the closest number).
(Thousands of \$)
2005 2004
Sales \$19,535 \$15,470
Cost of Goods Sold \$15,101 \$11,184
Inventory \$ 2,708 \$2,180

A) 8.96
B) 7.22
C) 6.93
D) 6.18

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