# Dell Inc. - Financial Ratio Calculations

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?

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#### 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 ...

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