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DELL Inc. Financial Statements

For DELL Inc.
Financial Statements

Income Statement: Is the format more like a single-step or multistep format?

Determine gross profit, income from operations, and net income for the last two years; comment on the increases or decreases in these amounts.

Balance Sheet: Show that Assets = Liabilities + Stockholders' Equity for the past two years.

Statement of Cash Flows (http://www.dell.com/downloads/global/corporate/inv_history/cash_flows.pdf): Are cash flows from operations more or less than net income for the past two years?

Is the company expanding through investing activities?

What is the company's most important source of financing?

Overall, has cash increased or decreased over the past two years?

Accounting Policies

What are the significant accounting policies, if any, relating to revenue recognition, cash, short-term investments, merchandise inventories, and property and equipment?

What are the topics of the notes to the financial statements?

(see attached file for statements)

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Financial Statements

Income Statement: Is the format more like a single-step or multistep format?

The income statement for Dell Inc. is more like a multistep format because it derives net income in a step-by-step manner. From the multistep format, the user will be able to identify the gross profit and income from operations of the company. In addition, other revenues and expenses are separated from operating revenues and expenses so that income from operation can be isolated from the financing and non-operating aspects.

Determine gross profit, income from operations, and net income for the last two years; comment on the increases or decreases in these amounts.

From the income statement, we can see that the gross profit, income from operations, and net income for the last two years are a follows: -

3-Feb-06 28-Jan-05
Gross profit 9,950,000 9,015,000
Income from operations 4,347,000 4,254,000
Net income 3,572,000 3,043,000

Gross profit from the operation in the year 2005 has increased by 10.37% [calculating by (9,950,000 - 9,015,000)/9,015,000] from the operation in the year 2004. However, income from operations in the year 2005 has increased only by 2.19% [calculating by (4,347,000 - 4,254,000)/4,254,000] from the operation in the year 2004. This is the result from the increase in selling and administration expenses in the year 2005 by 19.59% [calculating by (5,140,000 - 4,298,000)/4,298,000] from the operation in the year 2004. Net income from the operation in the year 2005 has increased by 17.38% [calculating by (3,572,000 - 3,043,000)/ 3,043,000] from the operation in the year 2004.

Balance Sheet: Show that Assets = Liabilities + Stockholders' Equity for the past two years.

To simply show that assets = liabilities + stockholders' equity for the past two years, we will use the total assets, total liabilities, and total stockholders' equity for the past two years as follows: -

3-Feb-06 28-Jan-05
Total Assets 23,109,000 22,874,000

Total Liabilities 18,980,000 18,053,000
Total Stockholder Equity 4,129,000 4,821,000
Total Liabilities and Stockholder Equity 23,109,000 22,874,000

Statement of Cash Flows (http://www.dell.com/downloads/global/corporate/inv_history/cash_flows.pdf): Are cash flows from operations more or less than net income for the past two years?

3-Feb-06 28-Jan-05
Net Income 3,572,000 3,043,000
Cash flows from operations 4,839,000 5,310,000

As we can see form the statement of cash flows, cash flows from operations for the past two years are higher than the net income.

Is the company expanding through investing activities?

We can also see that Dell Inc. is expanding through investing activities by the purchases amount of 7,562,000 made in the year 2005 and 12,261,000 made in the year 2004.

What is the company's most important source of financing?

From the statement of cash flows, we can see that Dell Inc. ...

Solution Summary

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