Financial Statement Analysis and Strategic Analysis of Dell 121223094730 Phpapp02

1. Income Statement 2. Balance Sheet 3. Ratio Analysis 4.
Space Matrix's
E15
Dell Strategy Formulation Analytical Frame Work And Financial Statement Analysis
5. BCG Matrix's 6. Internal External Matrix's IFE 7. External Factors evaluation Matrix's 8. CPM 9. Grand Strategy 10. QSPM
End Show 5-1
Introduction of Dell
Dell, Inc. is an American 1. Income multinational information Statement 2. Balance Sheet technology corporation based in 1 3. Ratio Analysis Dell Way, Round, Texas, United 4. Space States, that develops, sells and Matrix's 5. BCG Matrix's supports computers and related 6. Internal products and services. Bearing the External Matrix's IFE name of its founder, Michael Dell, 7. External Factors the company is one of the largest evaluation technological corporations in the Matrix's 8. CPM world, employing more than 9. Grand Strategy 103,300 people worldwide. Dell is 10. QSPM listed at number 41 in the Fortune 500 list.
End Show 5-2
Vision and Mission

1. Income Statement 2. Balance Sheet 3. Ratio Analysis 4. Space Matrix's
5. BCG Matrix's 6. Internal External Matrix's IFE 7. External Factors evaluation Matrix's
Vision Statement: "Dell is committed to being a good neighbor in the communities we call home. We must continue to grow responsibly protecting our natural resources and practicing sustainability in all its forms and improve the communities where we live and work through our financial and volunteer efforts."
MISSION STATEMENT:
Dell's mission is to be the most successful Computer Company in the world at delivering the best customer experience in markets we serve. In doing so, Dell will meet customer expectations of. Highest quality Leading technology Competitive pricing Individual and company accountability Best-in-class service and support Flexible customization capability Superior corporate citizenship Financial stability
8. CPM 9. Grand Strategy 10. QSPM End Show

5-3
DELL INC.
Income Statement
Annual Results
FY09 FY10 FY11
Statement of Operations (in millions)
Income Statement: Net revenue Cost of revenue Gross margin SG&A R&D Total operating expenses Operating income Investment and other income, net Income before taxes Income tax provision $61,101 50,144 10,957 7,102 665 7,767 3,190 134 3,324 846 2,478 $52,902 43,641 9,261 6,465 624 7,089 2,172 (148) 2,024 591 1,433 $61,494 50,098 11,396 7,302 661 7,963 3,433 (83) 3,350 715 2,635
5. BCG Matrix's 6. Internal External Matrix's IFE 7. External Factors evaluation Matrix's 8. CPM 10. QSPM
End Show 5-4
9. Grand Strategy
Net income
DELL INC.
Balance Sheet
Annual Results
FY09 FY10 FY11
Statement of Financial Position

(in millions)
1. Income Statement
2. Balance Sheet Cash & cash equivalents 3. Ratio Analysis Short-term investments 4. Space Matrix's
Inventories, net Other Total current assets PP&E, net Investments
Assets:
$8,352 740 4,731 1,712 867 3,749 20,151 2,277 454 500 3,118 26,500
$10,635 373 5,837 2,706 1,051 3,643 24,245 2,181 781 332 6,113 33,652
$13,913 452 6,493 3,643 1,301 3,219 29,021 1,953 704 799 6,122 38,599
Accounts receivable, net Financing receivables, net
End Show 5-5
Long-term financing receivable, net Other non-current assets Total assets: Liabilities & Stockholders Equity: Short-term borrowings Accounts payable Accrued and other Short-term deferred services revenue Total current liabilities
113 8,309 3,736 2,701 14,859 1,898 3,000 2,472 22,229 4,271 26,500
663 11,373 3,884 3,040 18,960 3,417 3,029 2,605 28,011 5,641 33,652
851 11,293 4,181 3,158 19,483 5,146 3,518 2,686 30,833 7,766 38,599
9. Grand StrategyLong-term debt
Long-term deferred services revenue Other non-current liabilities Total liabilities: Stockholder's equity: Total liabilities & equity:
Ratios Analysis
DELL INC.
Selected Financial Data & Ratios
FY09 FY10 FY11
1. Income Statement
(in millions, except per share data and ratios) (Unaudited)
2. Balance Sheet 3. Ratio AnalysisLiquidity: 4. Space Matrix's
Yearly results for liquidity, Profitability, Solvency, and Activity Ratios
Net working capital ratio Current ratio Quick ratio Cash Ratio Activity Ratios: Account Receivable Turnover Ratio # of Days Account Receivable outstanding Fixed Assets turnover ratio Inventory turnover ratio Average # of days inventory outstanding Operating Cycle Total Assets turnover Ratio Profitability: Return on Investment Gross margin
5292 1.356 1.30 0.611
5285 1.278 1.22 0.58
9538 1.489 1.42 0.737
End Show 5-6
12.91 28.27 26.83 57.83 6.31 64.14 2.305
10.01 36.46 24.25 45.50 8.02 53.53 1.57
19.55 18.67 31.48 42.60 5.56 51.16 1.59
0.28% 17.93% 5.44% 3.83% 4.05%
0.12% 17.50% 3.82% 2.11% 2.70%
0.17% 18.53% 5.44% 2.84% 4.28%
9. Grand Strategy Operating margin

Return on Assets Net profit margin Solvency Ration: Debt Ratio Debt to equity ratio
0.838 5.2
0.832 4.96
0.798 3.97
Common Size Analysis

Vertical Analysis
1. Income Statement
Income Statement: $61,101 50,144 10,957 7,102 665 7,767 3,190 134 3,324 846 2,478 100% 82 18 12 1 13 5 0 5 1 4 $52,902 43,641 9,261 6,465 624 7,089 2,172 -148 2,024 591 1,433 100 82 18 12 1 13 4 0 4 1 3 $61,494 50,098 11,396 7,302 661 7,963 3,433 -83 3,350 715 2,635 100 81.46811 18.53189 11.87433 1.074902 12.94923 5.582658 -0.13497 5.447686 1.162715 4.284971 FY09 FY10 FY11
2. Balance Sheet Net revenue 3. Ratio Analysis 4. Space Matrix's
Cost of revenue Gross margin SG&A R&D Total operating expenses Operating income Investment and other income, net Income before taxes Income tax provision
End Show 5-7
9. Grand Strategy
Net income
Horizontal Analysis Balance sheet

Dell Incorporation Horizontal Analysis of Balance sheet FY09 Assets: Cash & cash equivalents $8,352 740 4,731 1,712 867 3,749 20,151 2,277 454 500 3,118 26,500 $100 100 100 100 100 100 100 100 100 100 100 100 $10,635 373 5,837 2,706 1,051 3,643 24,245 2,181 781 332 6,113 33,652 27.33 -49.59 23.37 58.06 21.22 -2.83 20.31 -4.21 72.02 -33.6 96.05 26.98 $13,913 452 6,493 3,643 1,301 3,219 29,021 1,953 704 799 6,122 38,599 30.82 21.17 11.23 34.62 23.78 -11.63 19.96 -10.45 -9.85 140.66 0.147 14.7 FY10 FY11
1. Income Statement
Short-term investments Accounts receivable, net
2. Balance Sheet Financing receivables, net Inventories, net 3. Ratio Analysis Other 4. Space Matrix's
Total current assets PP&E, net Investments Long-term financing receivable, net Other non-current assets Total assets: Liabilities & Stockholders Equity: Short-term borrowings Accounts payable Accrued and other Short-term deferred services revenue Total current liabilities Long-term debt Long-term deferred services revenue Other non-current liabilities Total liabilities:
End Show 5-8
113 8,309 3,736 2,701 14,859 1,898 3,000 2,472 22,229 4,271 26,500 100
100 100 100 100 100 100 100 100 100 5,641 100
663 11,373 3,884 3,040 18,960 3,417 3,029 2,605 28,011 32.08 33,652
486.72 36.87 3.96 12.55 27.59 80.03 0.96 5.38 26.01 7,766 26.98
851 11,293 4,181 3,158 19,483 5,146 3,518 2,686 30,833 37.67 38,599
28.35 -0.703 7.64 3.88 2.75 50.59 16.14 3.109 10.07
9. Grand Strategy
Stockholder's equity: Total liabilities & equity:
14.7
SPACE MATRIX
End Show 5-9
Boston consulting group or BCG matrix

1. Income Statement
4.
Space Matrix's
End Show 5-10
Relative market Share
2. Balance Sheet 3. Ratio Analysis
Asia
Revenues Profit Percentage of Revenue 66.94% 21.922% 11.133% 100% Growth rate Relative e Market Share 75% 20% 10% 95%
Region
9. Grand Strategy
Americas Europe Asia-Pacific Total
$32,940M $10,787M $5,478M $49,205M
$2,978M $818M $458M $4,254M
21% 61% 29% 100%
SPACE MATRIX
FS
CONT.
Aggressive
Conservative
End Show 5-11 CA
-6 -5 -4 -3 -2 -1
1 -1
IS
-2
-3
-4
-5
Defensive
-6
Competitive
ES
THE INTERNAL-EXTERNAL (IE) MATRIX

The IFE Tot al W eight ed Scor e
Strong 3.0 to 4.0 High 3.0 to 3.99 Americas Europe I Average 2.0 to 2.99 II
The EFE Tot al W eight ed Scor e
1. Income Statement
Weak 1.0 to 1.99 III
2. Balance Sheet 3. Ratio Analysis 4. Space Matrix's
End Show 5-12
Medium 2.0 to 2.99
IV
VI
Dell
Low 1.0 to 1.99 Asia-Pacific VII VIII IX
9. Grand Strategy
Hold and Maintain
THE INTERNAL-EXTERNAL (IE) MATRIX CONT.

Region Revenues Profit Percentage of Revenue IFE Score
End Show 5-13
Americ as
$32,940M
$2,978M
66.94%
3.5
Europe
$10,787M
$818M
21.922%
2.8
AsiaPacific
$5,478M
$458M
11.133%
1.2
Total
$49,205M
$4,254M
100%
EXTERNAL FACTOR EVALUATION (EFE) MATRIX Key External Factors

Weight Rating
Weighted Score
Opportunities
Demand for personal computers continues to grow. 0.100 0.050 0.100 0.050 3 4 4 2 0.300 0.200 0.400 0.100
1. Income Statement
Many customers switching from desktops to notebooks Microsoft desires to partner with Dell.
2. Balance SheetConsumer electronics is a profitable business. 3. Ratio Analysis 4. Space Matrix's

Higher consumer spending in the US. Incorporated managed and professional services.
0.025 0.025
2 2
0.050 0.050
End Show
Global enterprise systems. Training and certification program. Financial services offered. Growth in the color printer market.
0.050 0.025 0.025 0.025
3 2 3 2
0.150 0.050 0.075 0.050
Threats
Alliance in the PC industry Higher oil prices could crimp consumers spending. 0.050 0.050 3 3 0.150 0.150
Commercial demand fails to accelerate. Competitors are strong. Slow growth in the PC market. Component price fluctuation
0.025 0.150 0.100 0.025 0.025
2 3 2 4 3
0.050 0.450 0.200 0.100 0.075
9. Grand Strategy Price for computing power has decreased.

Computer market has broadened. Currency fluctuations in the international markets.
0.050 0.050
3 2
0.150 0.100
TOTAL
1.00
2.85
5-14
Competitive Profile Matrix's

Apple Critical Success Factors Price 0.10 0.10 0.15 0.15 0.15 0.04 0.06 0.06 0.14 0.05 1.00 2 2 3 4 4 4 4 2 4 3 Weight Rating Weighte d Score 0.20 0.20 0.45 0.60 0.60 0.16 0.24 0.12 0.56 0.15 3.02 3 3 4 3 2 2 3 2 2 2 Rating HP Weighted Score 0.30 0.30 0.60 0.45 0.30 0.08 0.18 0.12 0.28 0.10 2.71 4 4 3 3 3 3 3 3 2 3
Dell
Rating Weighted Score 0.40 0.40 0.45 0.45 0.45 0.12 0.18 0.18 0.28 0.15 3.06
1. Income Statement
2. Balance Sheet Market Share 3. Ratio Analysis 4. Space Matrix's

Financial Product Quality Consumer Loyalty Advertising Management Global Expansion Total
5. BCG Matrix's Position 6. Internal External Matrix's IFE 7. External Factors evaluation Matrix's 8. CPM 10. QSPM
End Show 5-15
9. Grand Strategy
GRAND STRATEGY MATRIX

End Show 5-16
QSPM
Strategic Alternatives Key Internal Factors Weight Build another manufacturing plant in the US. Expand marketing efforts in Asia and Europe
1. Income Statement 2. Balance Sheet Strengths 3. Ratio Analysis Built-to-order personal computers sold directly to customers. 4. Space Matrix's
Direct sales via mail, phone orders, and the Internet. 0.100
AS ---
TAS ---
AS ---
TAS ---
0.050
---
---
---
---
5. BCG Matrix's 6. Internal External Matrix's IFE 7. External Factors evaluation Matrix's 8. CPM
Built-to-order personal computers eliminate markups of resellers. Built-to-order personal computers greatly reduce the costs and risks associated with carrying large stocks of parts, components, and finished goods.
0.025
---
---
---
---
0.050
---
---
---
---
Dell is the current PC industry leader.
0.100
3.0
0.300
2.0
0.200
Dell has regional and manufacturing plants globally.
0.050
1.0
0.050
4.0
0.200
9. Grand StrategyDell is a well-known brand name. 10. QSPM

End Show 5-17
Dells direct-to-consumer strategy has given the company a substantial cost and profit margin over its rivals.
0.050
4.0
0.200
3.0
0.150
0.050
---
---
---
---
QSPM
1. Income Statement
strengths and weakness (cont.)

0.025 1.0 0.025 2.0 0.050
Dell has a good relationship with the companys large corporate and government customers and continues to focus on these sales and service relationships.
2. Balance SheetDell holds 29.1% of the total market for personal computer sales in the Americas, putting Dell ahead of its competitors. 3. Ratio Analysis 4. Space Matrix's
Dells built-to-order manufacturing process results in rapid inventory turnover and reduced inventory levels.
0.050
3.0
0.150
2.0
0.100
0.050
---
---
---
---
5. BCG Matrix's 6. Internal External Matrix's IFE 7. External Factors evaluation Matrix's 8. CPM
To ensure defect free products, testing is performed by Dell along the process and on the final computer product. 0.050 ---------
Dell has a wide range of customers including large corporations, government agencies, healthcare, educational institutes, small business, and individuals. 0.050 4.0 0.200 3.0 0.150
Dell is ranked # 1 by Technology Business because of its Intel-based server satisfaction for 27 of the past 29 quarters. 0.050 ---------
Dell divides its sales and marketing force among the various 9. Grand Strategy
10. QSPM
End Show 5-18
customer groups in order to meet each groups specific needs.
0.025
---
---
---
---
Dell advertises its products on the Internet, TV, and by mailing a broad range of marketing publications.
0.025
---
---
---
---
QSPM
Weaknesses

0.025 4.0 0.050 2.0 0.050
1. Income Statement
Dell has only two manufacturing plants and one regional office in the United States.
2. Balance Sheet Dell computers cannot be purchased in retail 3. Ratio Analysis stores. 4. Space Matrix's
Dell has over 40 locations globally yet Dell is not the #1 supplier in Asia Pacific, European, Middle East, or African segments. Dell rebrands printers purchased from Lexmark, which is a major production cost for Dell.
0.025
---
---
---
---
End Show 5-19
0.050
1.0
0.050
4.0
0.200
0.025
---
---
---
---
Dell is too reliant on foreign suppliers, because of this a disruption of fuel supply could make the price of shipping go up. Dell is so large now that it might not be able to grow at the same pace. SUBTOTAL 1.00 1.20 1.20 0.025 1.0 0.025 2.0 0.050 0.050 3.0 0.150 1.0 0.050
9. Grand Strategy
QSPM
Key External Factors Weight

Build another manufacturing plant in the US. Expand marketing efforts in Asia and Europe

Opportunities Demand for personal computers continues to grow. 0.100
AS 2.0
TAS 0.200
AS 4.0
TAS 0.400
End Show 5-20
Many consumers switching from desktops to notebooks.
0.050
---
---
---
---
Microsoft desires to partner with Dell. Consumer electronics is a profitable business.
0.100 0.050
--3.00
--0.150
--1.0
--0.050
Higher consumer spending in the US. Incorporated managed and professional services.
0.025 0.025
3.00 ---
0.075 ---
1.0 ---
0.025 ---
QSPM
Global enterprise systems.

0.050 0.025 0.025 0.025 2.0 ------0.100 ------4.0 ------0.200 -------
Training and certification program.
Financial services offered. Growth in the color printer market. Threats Alliance in the PC industry Higher oil prices. Commercial demand fails to accelerate. Competitors are strong. Slow growth in the PC market. Component price fluctuation Price for computing power has decreased. Computer market has broadened. Currency fluctuations in the international markets.
0.050 0.050 0.025 0.150 0.100 0.025 0.025 0.050 0.050
2.0 ----2.0 --------1.0
0.100 ----0.300 --------0.050
4.0 ----3.0 --------3.0
0.200 ----0.450 --------0.150
End Show 5-21
SUBTOTAL SUM TOTAL ATTRACTIVENESS SCORE
1.00
0.98 2.18
1.48 2.68
Add two new manufacturing plants in the United States has the attractive score of 2.18 in comparison of the expending the business into Europe and Asia which has total attractive score of 2.68. Expand into Europe and Asia building new manufacturing plants and retail stores is therefore that the company should introduce

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1. Income Statement 2. Balance Sheet 3. Ratio Analysis 4.

Vision and Mission

8. CPM 9. Grand Strategy 10. QSPM End Show

1. Income Statement 2. Balance Sheet 3. Ratio Analysis 4. Space Matrix's

Statement of Operations (in millions)

Statement of Financial Position

Accounts receivable, net Financing receivables, net

9. Grand StrategyLong-term debt

(in millions, except per share data and ratios) (Unaudited)

2. Balance Sheet 3. Ratio AnalysisLiquidity: 4. Space Matrix's

Yearly results for liquidity, Profitability, Solvency, and Activity Ratios

5292 1.356 1.30 0.611

5285 1.278 1.22 0.58

9538 1.489 1.42 0.737

12.91 28.27 26.83 57.83 6.31 64.14 2.305

10.01 36.46 24.25 45.50 8.02 53.53 1.57

19.55 18.67 31.48 42.60 5.56 51.16 1.59

0.28% 17.93% 5.44% 3.83% 4.05%

0.12% 17.50% 3.82% 2.11% 2.70%

0.17% 18.53% 5.44% 2.84% 4.28%

9. Grand Strategy Operating margin

Common Size Analysis

2. Balance Sheet Net revenue 3. Ratio Analysis 4. Space Matrix's

Horizontal Analysis Balance sheet

Short-term investments Accounts receivable, net

28.35 -0.703 7.64 3.88 2.75 50.59 16.14 3.109 10.07

Stockholder's equity: Total liabilities & equity:

Boston consulting group or BCG matrix

Relative market Share

2. Balance Sheet 3. Ratio Analysis

Americas Europe Asia-Pacific Total

$32,940M $10,787M $5,478M $49,205M

$2,978M $818M $458M $4,254M

21% 61% 29% 100%

THE INTERNAL-EXTERNAL (IE) MATRIX

The EFE Tot al W eight ed Scor e

Weak 1.0 to 1.99 III

2. Balance Sheet 3. Ratio Analysis 4. Space Matrix's

Medium 2.0 to 2.99

Hold and Maintain

THE INTERNAL-EXTERNAL (IE) MATRIX CONT.

EXTERNAL FACTOR EVALUATION (EFE) MATRIX Key External Factors

2. Balance SheetConsumer electronics is a profitable business. 3. Ratio Analysis 4. Space Matrix's

0.050 0.025 0.025 0.025

0.150 0.050 0.075 0.050

0.025 0.150 0.100 0.025 0.025

0.050 0.450 0.200 0.100 0.075

9. Grand Strategy Price for computing power has decreased.

Competitive Profile Matrix's

2. Balance Sheet Market Share 3. Ratio Analysis 4. Space Matrix's

GRAND STRATEGY MATRIX

Dell is the current PC industry leader.

Dell has regional and manufacturing plants globally.

9. Grand StrategyDell is a well-known brand name. 10. QSPM

strengths and weakness (cont.)

customer groups in order to meet each groups specific needs.

strengths and weakness (cont.)

strengths and weakness (cont.)

1. Income Statement 2. Balance Sheet 3. Ratio Analysis 4. Space Matrix's

Many consumers switching from desktops to notebooks.

Microsoft desires to partner with Dell. Consumer electronics is a profitable business.

strengths and weakness (cont.)