Dell Inc.

Dell is a multinational information technology corporation based in Round

Rock, Texas, United States, that develops, sells and supports computers and

related products and services. In year 1984 Dell was founded and named after its

founder Michael Dell, who dropped out of school in order to provide his full-time

for his newly started business, after getting about $300,000 from his family as a

mean of expansion. Dell is one of the largest technological corporations in the

world, with more than 96,000 employees worldwide. Dell has grown since its

prime remarkable mergers and acquisitions together with Alienware (2006)

and Perot Systems (2009).

Dell is considered as one of the world's top suppliers of personal

computers, where it offers a wide range of technology products for the consumer,

education, enterprise, and government sectors. In addition to a full line of

desktop and notebook PCs, Dell offers network servers, data storage systems,

printers, Ethernet switches, and peripherals, such as displays and projectors.

Dell is well known for its advance and innovations in supply chain

management and a well established e-commerce.

History:

Dell’s origin is back to the year of 1984; Michael Dell started the company

while he was still a student at University of Texas at Austin at the time.  Where

the beginning of his business was from his dorm-room, selling IBM PC-

compatible computers built from stock components. The following year after

foundation, Dell came out with their very first computer called the Turbo which

had an eight-megahertz processor that was advertised for its systems in national

computer magazines for sale directly to consumers. The company grossed more

than $73 million in its first year of trading. Michael Dell initiated his trading

through the idea of selling personal computer systems directly to customers.

1

In 1988, the company changed its name from “PC’s Limited” to “Dell

Computer Corporation” and began to expend globally.

In 1996, Dell began its e-commerce through selling computers via its web

site, and in 2002, Dell started new product lines including televisions, handhelds,

digital audio players, and printers. Dell's first acquisition occurred in 1999 with the

purchase of ConvergeNet Technologies. In 2003, the company’s brand was

changed to "Dell Inc." in order to recognize the company's expansion beyond

computers. In 2006, Dell acquired Alienware, which introduced several new items

to Dell products. To prevent cross-market products, Dell continues to run

Alienware as a separate entity but still a wholly-owned subsidiary.

On September 21, 2009, Dell announced its intent to acquire Perot

Systems (based in Plano, Texas) in a reported $3.9 billion deal. Perot Systems

brought applications development, systems integration, and strategic consulting

services through its operations in the U.S. and 10 other countries. In addition, it

provided a variety of business process outsourcing services, including claims

processing and call center operations.

2

DELL INC Officers and Directors 1

A. Michael S. Dell- CEO, total compensation: $ 963,623.00, Mr. Dell is the

chairman of the Board since he founded the company in 1984, besides being

the chief Executive Officer; Mr. Dell’s success is due to his:

1. Leadership Experience,

2. Founder, Chairman and CEO of Dell Industry Experience,

3. Knowledge of new and existing technologies, Dell’s industry and Dell’s

customers.

B. Brian T. Gladden- CFO, total compensation: $ 2.59 million, Senior Vice

President, He is responsible for all aspects of Dell’s finance functions,

including accounting, financial planning and analysis, tax, treasury, audit,

information technology, and investor relations, and is also responsible for our

global information systems and technology structure.

C. Thomas W. Sweet- Chief Accounting Officer, Joined Dell in May 1997,

and has held a variety of executive-level roles in the company’s finance

organization.

D. Lawrence P. Tu- General Counsel, joined Dell as Senior Vice President,

General Counsel and Secretary in July 2004; he is responsible for overseeing

Dell’s global legal, governmental affairs, and ethics and compliance

departments.

E. Erin Nelson- Senior Vice President, Ms. Nelson currently serves as

Senior Vice President and Chief Marketing Officer (CMO). In this role, she is

responsible for customer relationship management, communications, brand

strategy, core research and analytics, and overall marketing agency

management.

1 “DELL INC Officers & Directors” http://www.dailyfinance.com/company/dell-inc/dell/nas/key-executives

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F. Ronald G. Garriques- President, Divisional, Communication Solutions,

and total compensation: $ 8.05 million, Mr. Garriques focuses on bringing to

market connected computing products and services through new channels of

distribution, including telecommunications, cable, satellite and others.

G. Stephen J. Felice- President, Divisional, total compensation: $ 5.57

million, Mr. Felice leads the Dell organization that creates and delivers

specific solutions and technology to more than 72 million small and medium-

sized businesses globally and is responsible for Dell’s portfolio of consumer

products, including desktops, notebooks, software and peripherals as well as

product design and sales.

H. Peter A. Altabef- President, Divisional, total compensation: $ 16.87

million, joined Dell, after Dell’s acquisition of Perot Systems in November

2009, as President of Services, Dell’s global IT services and business

solutions unit

I. Bradley R. Anderson- Senior VP, Divisional, he is responsible for

worldwide engineering, design, development and marketing of Dell’s

enterprise products, including servers, networking and storage systems.

J. Jeffrey W. Clarke- Vice Chairman, Operations and Technology,

Divisional, he is responsible for worldwide engineering, design and

development of Dell’s business client products, including Dell OptiPlextm

Desktops, Latitude Notebooks and Precision Workstations, and production of

all company products worldwide.

K. Paul D. Bell- president, Divisional, he is responsible for leading the

teams that help governments, education, healthcare and other public

organizations make full use of information technology.

L. Andrew C. Esparza- Senior VP, Divisional, he is responsible for driving

the strategy and supporting initiatives to attract, motivate, develop, and retain

world-class talent in support of our business goals and objectives. He also

has responsibility for corporate security and corporate responsibility on a

worldwide basis.

4

M. Steve Schuckenbrock- President, Divisional, he is leading the delivery

of innovative and globally consistent Dell solutions and services to the world’s

largest corporate IT users.

Products 1

Dell’s Business/Corporate class of products represent brand where the

company advertises emphasizes long life-cycles, reliability, and serviceability.

Such brands include:

OptiPlex (office desktop computer systems).

Vostro (office/small business desktop and notebook systems).

N-Series (desktop and notebook computers shipped with Linux or

FreeDOS installed).

Latitude (business-focused notebooks).

Precision (workstation systems and high-performance notebooks).

PowerEdge (business servers).

PowerVault (direct-attach and network-attached storage).

PowerConnect (network switches).

Dell/EMC (storage area networks).

While Dell's Home Office/Consumer class of products emphasize the value,

performance, and expandability. These brands include:

Inspiron (budget desktop and notebook computers).

Studio (mainstream desktop and laptop computers).

1 “Dell” http://en.wikipedia.org/wiki/Dell

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XPS (high-end desktop and notebook computers).

Studio XPS (high-end design-focus of XPS systems and extreme

multimedia capability).

Alienware (high-performance gaming systems).

Adamo (high-end luxury laptop).

Manufacturing:

Since dell started operating it was considered as a pioneer in the

technology industry, especially in the personal computers. The company’s

manufacturing strategy is to minimize the delay between the purchase and

delivery of the product to the costumers that dell is manufacturing near to its

costumers, which will reduce the inventory costs that is a signature of Dell. Dell's

manufacturing process is in-house that it covers assembly, software installation,

functional testing and quality control.

Green initiatives:

Dell could be considered as the first company in the technology industry to

establish a product-recycling goal and introduced its global consumer recycling-

program in 2006. Dell was awarded the "Recycling Works" award for their

producer responsibility, where it reported the recovery of more then 40,000 tons

of IT equipments that will be recycled. Dell’s goal is to be the greenest

technology company on the globe. It also introduce the expression of "The Re-

Generation" referring to the desire of the population of all ages to make a

difference through developing the global environment, while Dell is planning to be

the leader in setting standards for the technology industry.

Technical support:

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Dell's Consumer division offers 24x7 phones based and online

troubleshooting rather than only during business hours in certain markets such

as the United States and Canada. Dell now also offers separate support options

for IT staff and for non-IT professionals.

Organization:

The board of directors is consists of eleven members who are responsible

to run the company, this board of directors is being elected by the shareholders,

and the corporate structure and management of Dell extends beyond the board

of directors. The Dell Global Executive Management Committee sets strategic

directions.

Members in the board of directors: 1

1. Thomas W. Luce, III _ Director

2. Senator Professor Samuel A. Nunn, Jr _ Director.

3. Mr. Gerard J. Kleisterlee _ Director

4. Shantanu Narayen _ Director

5. Klaus S. Luft _ Director

6. James W. Breyer _ Director

7. Judy C. Lewent _ Director

8. William H. Gary, III _ Director

9. Mr. Alex J. Mandl _ Director

10.Mr. Ross H. Perot, Jr _ Director, the Chairman of the Board of Perot

Systems Corporation from September 2004 until its acquisition by Dell on

November 3, 2009.

1 “DELL INC Officers & Directors”

http://www.dailyfinance.com/company/dell-inc/dell/nas/key-executives

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11. Donald J. Carty _ Director, former Vice Chairman and Chief Financial

Officer of Dell.

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Marketing:

Dell advertisements have appeared in several types of  media including 

television, the Internet, magazines, catalogs and newspapers. Some of Dell Inc's

marketing strategies include lowering prices at all times of the year, offering free

bonus products (such as Dell printers), and offering free shipping in order to

attract consumers, encourage more sales and to stave off competitors.

Competition:1

Dell's major competitors include Apple, Hewlett Packard (HP), Acer,

Toshiba, Gateway, Sony, Asus, Lenovo, IBM, Samsung, and Sun Microsystems.

Dell and its subsidiary, Alienware, compete in the enthusiast market against

AVADirect, Falcon Northwest, VoodooPC (a subsidiary of HP).

What set the company apart was not just its consumer-oriented focus but

also its allowance for people to customize their computers during the ordering

process. Because each computer was individually assembled, this was

possible. 2

The industries Where Dell Inc. is competing include the personal computers,

computer networking equipment, computer hardware, servers & mainframes,

workstations &thin clients, and finally routing & switching equipments.

Competing in different industries imposes many risks on Dell Inc. where

according to its goal Dell should be the leader in each industry and it has

to keep competing different competitors in different industries.

1DELL INC Top Competitors http://www.dailyfinance.com/company/dell-inc/dell/nas/top-

competitors2 Dell Inc. (DELL) competitors http://finance.yahoo.com/q/co?s=dell

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DELL INC : Income Statement 1

Year over year, Dell Inc. has seen revenues fall from $61.1B to $52.9B.

This along with an increase in the cost of goods sold expense has led to a

reduction in the bottom line from $2.5B to $1.4B.

Currency in

Millions of U.S. Dollars

As of: Feb 01

2008

Jan 30

2009

Jan 29

2010

Revenues 61,133.0 61,101.0 52,902.0

TOTAL REVENUES 61,133.0 61,101.0 52,902.0

Cost of Goods Sold 49,462.0 49,998.0 43,404.0

GROSS PROFIT 11,671.0 11,103.0 9,498.0

Selling General & Admin Expenses, Total 7,446.0 6,966.0 6,113.0

R&D Expenses 610.0 663.0 617.0

OTHER OPERATING EXPENSES,

TOTAL8,056.0 7,629.0 6,730.0

OPERATING INCOME 3,615.0 3,474.0 2,768.0

Interest Expense -45.0 -93.0 -160.0

Interest and Investment Income 496.0 180.0 57.0

NET INTEREST EXPENSE 451.0 87.0 -103.0

Currency Exchange Gains (Loss) -30.0 115.0 -59.0

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Other Non-Operating Income (Expenses) -48.0 -58.0 12.0

EBT, EXCLUDING UNUSUAL ITEMS 3,988.0 3,618.0 2,618.0

Merger & Restructuring Charges -92.0 -282.0 -596.0

Gain (Loss) on Sale of Investments 14.0 -10.0 2.0

Gain (Loss) on Sale of Assets -- -- --

Other Unusual Items, Total -83.0 -2.0 --

In Process R&D Expenses -83.0 -2.0 --

EBT, INCLUDING UNUSUAL ITEMS 3,827.0 3,324.0 2,024.0

Income Tax Expense 880.0 846.0 591.0

Earnings from Continuing Operations 2,947.0 2,478.0 1,433.0

NET INCOME 2,947.0 2,478.0 1,433.0

NET INCOME TO COMMON INCLUDING

EXTRA ITEMS2,947.0 2,478.0 1,433.0

NET INCOME TO COMMON EXCLUDING

EXTRA ITEMS2,947.0 2,478.0 1,433.0

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DELL INC: balance sheet 1

Although debt as a percent of total capital increased at Dell Inc. over the

last fiscal year to 41.97%, it is still in-line with the Computers and Peripherals

industry's norm. Additionally, there are enough liquid assets to satisfy current

obligations. Accounts Receivable are typical for the industry, with 51.56 days

worth of sales outstanding. Last, Dell Inc. is among the least efficient in its

industry at managing inventories and has been consistently getting worse. At the

most recent fiscal year end there were 8.04 days of this company's Cost of

Goods Sold tied up in Inventories.

Currency in

Millions of U.S. Dollars

As of: Feb 01

2008

Jan 30

2009

Jan 29

2010

Assets

Cash and Equivalents 7,764.0 8,352.0 10,635.0

Short-Term Investments 208.0 740.0 373.0

TOTAL CASH AND SHORT TERM

INVESTMENTS7,972.0 9,092.0 11,008.0

Accounts Receivable 7,693.0 6,443.0 8,543.0

TOTAL RECEIVABLES 7,693.0 6,443.0 8,543.0

Inventory 1,180.0 867.0 1,051.0

Prepaid Expenses 370.0 447.0 539.0

Deferred Tax Assets, Current 596.0 499.0 444.0

1 Dell Inc: Financial Statement

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Restricted Cash 294.0 213.0 147.0

Other Current Assets 1,775.0 2,590.0 2,513.0

TOTAL CURRENT ASSETS 19,880.0 20,151.0 24,245.0

Gross Property Plant and Equipment 4,614.0 4,510.0 4,652.0

Accumulated Depreciation -1,946.0 -2,233.0 -2,471.0

NET PROPERTY PLANT AND

EQUIPMENT2,668.0 2,277.0 2,181.0

Goodwill 1,648.0 1,737.0 4,074.0

Long-Term Investments 1,560.0 454.0 782.0

Accounts Receivable, Long Term 407.0 500.0 332.0

Deferred Tax Assets, Long Term 485.0 568.0 237.0

Other Intangibles 780.0 724.0 1,694.0

Other Long-Term Assets 133.0 89.0 107.0

TOTAL ASSETS 27,561.0 26,500.0 33,652.0

LIABILITIES & STOCKHOLDERS EQUITY

Accounts Payable 11,492.0 8,309.0 11,373.0

Accrued Expenses 1,821.0 3,009.0 3,279.0

Short-Term Borrowings 25.0 113.0 663.0

Current Portion of Long-Term Debt/Capital 200.0 -- --

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Lease

Current Income Taxes Payable 99.0 6.0 --

Other Current Liabilities, Total 2,403.0 721.0 605.0

Unearned Revenue, Current 2,486.0 2,701.0 3,040.0

TOTAL CURRENT LIABILITIES 18,526.0 14,859.0 18,960.0

Long-Term Debt 362.0 1,898.0 3,417.0

Unearned Revenue, Non-Current 2,774.0 3,000.0 3,029.0

Other Non-Current Liabilities 2,164.0 2,472.0 2,605.0

TOTAL LIABILITIES 23,826.0 22,229.0 28,011.0

Common Stock 10,589.0 11,189.0 11,472.0

Retained Earnings 18,199.0 20,677.0 22,110.0

Treasury Stock -25,037.0 -27,904.0 -27,904.0

Comprehensive Income and Other -16.0 309.0 -37.0

TOTAL STOCKHOLDERS EQUITY 3,735.0 4,271.0 5,641.0

TOTAL LIABILITIES AND EQUITY 27,561.0 26,500.0 33,652.0

 

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DELL INC: cash flow 1

Currency in

Millions of U.S. Dollars

As of: Feb 01

2008

Jan 30

2009

Jan 29

2010

NET INCOME 2,947.0 2,478.0 1,433.0

Depreciation & Amortization 596.0 666.0 647.0

Amortization of Goodwill and Intangible

Assets11.0 103.0 205.0

DEPRECIATION & AMORTIZATION,

TOTAL607.0 769.0 852.0

Asset Writedown & Restructuring Costs 83.0 2.0 --

Provision & Write-off of Bad Debts 187.0 310.0 429.0

Change in Accounts Receivable -1,086.0 480.0 -660.0

Change in Inventories -498.0 309.0 -183.0

Change in Accounts Payable 837.0 -3,117.0 2,833.0

Change in Unearned Revenues 1,032.0 663.0 135.0

Change in Other Working Capital -241.0 -421.0 -1,354.0

CASH FROM OPERATIONS 3,949.0 1,894.0 3,906.0

Capital Expenditure -831.0 -440.0 -367.0

1 Dell Inc: Financial Statement

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Sale of Property, Plant, and Equipment -- 44.0 16.0

Cash Acquisitions -2,217.0 -176.0 -3,613.0

Investments in Marketable & Equity

Securities1,285.0 749.0 155.0

CASH FROM INVESTING -1,763.0 177.0 -3,809.0

Short-Term Debt Issued -- 100.0 76.0

Long-Term Debt Issued 66.0 1,519.0 2,058.0

TOTAL DEBT ISSUED 66.0 1,619.0 2,134.0

Short Term Debt Repaid -100.0 -- --

Long Term Debt Repaid -165.0 -237.0 -122.0

TOTAL DEBT REPAID -265.0 -237.0 -122.0

Issuance of Common Stock 136.0 79.0 2.0

Repurchase of Common Stock -4,004.0 -2,867.0 --

Other Financing Activities -53.0 -- -2.0

CASH FROM FINANCING -4,120.0 -1,406.0 2,012.0

Foreign Exchange Rate Adjustments 152.0 -77.0 174.0

NET CHANGE IN CASH -1,782.0 588.0 2,283.0

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FINANCIAL RATIOS: (DELL Inc.):

A. Liquidity Ratios:

1. current Ratio= total current Assets / total current liabilities

Years 2008 2009 2010

Calculation

s

19,880 / 18,526 20,151 / 14,859 24,245.0 / 18,960

Results 1.07 times 1.36 times 1.28 times

2. Quick Ratio = (total current Assets - Inventories) / total current liabilities

Years 2008 2009 2010

Calculation

s

(19,880-

1,180 ) / 18,526

(20,151 - 867) /

14,859

(24,245 - 1,051) /

18,960

Results 1.01 times 1.3 times 1.2 times

3. Net working capital = total current assets – total current liabilities

Years 2008 2009 2010

Calculation

s

19,880 - 18,526 20,151 - 14,859 24,245 - 18,960

Results $ 1,354 $ 5,292 $ 5,285

The liquidity of a company is a mean of determining its ability to pay off

its short-terms debts obligations. Generally, the higher the value of the ratio,

the larger the margin of safety that the company possesses to cover short-term

debts, a high current and quick ratios involves less risk of the firm experiencing a

cash shortfall in the near future.

Dell Inc. increased its liquidity ratio from 2008 to 2009, then it decreased with a

little fraction from 2009 to 2010, this fraction doesn’t affect its ability to pay off its

short-terms debts obligation.

17

B. Activity Ratio:

1. Average collection period = (Accounts receivable / sales) * 360

Years 2008 2009 2010

Calculation

s

(7,693 / 61,133 )*

360

(6,443 / 61,101 )*

360

(8,543 / 52,902 )*

360

Results 45 days 38 days 58 days

2. Average payment period = (Accounts payable / purchases) * 360

Years 2008 2009 2010

Calculation

s

(11,492 / 1,180)*

360

(8,309 / 867)*

360

(11,373 / 1,051)*

360

Results 3,506 days 3,450 days 3,896 days

3. Inventory turnover = Cost Of Goods Sold / Inventory

Years 2008 2009 2010

Calculations 49,462 / 1,180 49,998 / 867 43,404 / 1,051

Results 42 times 57.7 times 41.3 times

4. Assets turnover = Sales / total Assets

Years 2008 2009 2010

Calculation

s

61,133 / 27,561 61,101 / 26,500 52,902 / 33,652

Results 2.22 times 2.3 times 1.6 times

The activity ratios aim is to measure a firm's ability to convert different

accounts within their balance sheets into cash or sales; dell’s average collection

period in 2010 increased where the best situation when it is decreased. While the

average payment period increased in 2010 that dell is able to delay its obligation

in order to benefits of its cash in hand.

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And in terms of dell’s Inventory and Assets, the ratios of inventory and assets

turnover show an increase from year 2008 to 2009 then a decrease in year 2010,

where both ratios should increase that they are measuring the company’s

efficiency to generate sales through making use of its assets and inventory.

C. Leverage Ratios

1. Debt to total assets = total debts / total assets

Years 2008 2009 2010

Calculation

s

562 / 27,561 1,898 / 26,500 3,417 / 33,652

Results 2.04 % 7.16 % 10.15 %

2. Debt to equity ratio = total debt / total stockholder’s equity

Years 2008 2009 2010

Calculations 562 / 3,735 1,898 / 4,271 3,417 / 5,641

Results 15.05 % 44.4 % 60.6%

The leverage ratios are to measure the company’s ability to meet its

financial obligations or in other words it is the company's methods of

financing, through indicating the extent to which the company relies on debt

as a source of financing.

Dell Inc. financing through debt has been increasing since 2008 until it

reached 60% of its equity financed through debt, which has a critical

outcomes on the risk and return of its shares.

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D. Profitability Ratios :

The profitability ratios assess a company’s ability to generate earnings as

compared to its expenses and other relevant costs incurred during a specific

period of time. For most of these ratios, having a higher value compared to a

competitor's ratio or the same ratio from a previous period is indicative that the

company is doing well.

1. Gross profit margin = Gross profit / sale

Years 2008 2009 2010

Calculation

s

11,671 / 61,133 11,103 / 61,101 9,498 / 52,902

Results 19.09 % 18.17 % 17.95 %

Dell’s Gross profit margin ratio shows a decrease in its ability to sell its products

with a price more than the cost of producing this product

2. Operating profit margin = operating profit / sale

Years 2008 2009 2010

Calculation

s

3,615 / 61,133 3,474 / 61,101 2,768 / 52,902

Results 5.91 % 5.7 % 5.2 %

The operating profit margin ratio reveals a decrease on how much dell Inc. earns

before interest and taxes from each dollar of sales.

3. Net profit margin = net profit after tax / sale

Years 2008 2009 2010

Calculations 2,947 / 61,133 2,478 / 61,101 1,433 / 52,902

Results 4.8 % 4.06 % 2.7 %

20

The net profit margin ratio shows the fraction of each dollar in revenue that is

available for equity holders after Dell Inc. pays its expenses plus interest and tax.

In 2010, the net profit margin indicates a major decrease almost the half of

revenues available for the shareholders.

4. Return on assets (ROA) = net profit after tax / total assets

Years 2008 2009 2010

Calculation

s

2,947 / 27,561 2,478 / 26,500 1,433 / 33,652

Results 10.7 % 9.3 % 4.2 %

The return on assets ratio expresses the firm’s net income as a return on the

book value of its assets; in 2010 the ROA decreased with a remarkable fraction

might be due to management’s inefficient use of its assets to generate earnings.

5. Return on equity (ROE) = net profit after tax / total equity

Years 2008 2009 2010

Calculation

s

2,947 / 23,826 2,478 / 22,229 1,433 / 28,011

Results 12.4 % 11.15 % 5.1 %

The return on equity ratio expresses the firm’s net income as a return on the

book value of its equity, also in 2010 the ROE decreased with a remarkable

fraction, this is might be due to decrease amount of money invested by

shareholders.

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E. Valuation Ratios :

The Valuation ratios estimate the attractiveness of a potential or existing

investment and get an idea of its valuation. 

1. Market Capitalization = Number of shares outstanding1 * Market price per

share

Years 2008 2009 2010

Calculation

s

2,060 * 19.90 1,944 * 9.50 1,957 * 13.55

Results 40,994 18,468 26,517.3

The market capitalization ratio calculate the total market value of a firm’s equity,

in 2009 there was a huge decrease in the market capitalization, then it increase

by a fair amount in 2010, the reason behind those changes might be due to the

change in the share prices over the three years.

2. Price Earnings Ratio ( P/E) = Market capitalization / Net Income

Years 2008 2009 2010

Calculation

s

40994 / 2947 18,468 / 2478 26517.35 / 1433

Results 13.9 7.45 18.5

The price earnings ratio measures the value of equity to the firm’s earnings, after

analyzing the P/E ratio, a decrease and increase could be noticed due to the

changes in the market capitalization.

1 Dell Inc: Financial Statement

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3. Market-to-Book Ratios= market value of equity / book value of equity

Years 2008 2009 2010

Calculations 40,994 / 3735 18,468 / 4271 26,517.35 / 5641

Results 11 4.3 4.7

This ratio is used to evaluate the firm; it indicates the value of the firm’s assets

when put to use where it must exceeds the historical costs of those assets. This

ratio provides a feedback on the market’s assessment of the management’s

decisions. Evaluating Dell’s book value to its market value we could observe the

decline from year 2008 to 2009 with a large amount, this might be caused by the

decrease of the amount of shareholders’ capital invested. Then in 2010 the

market-to-book ratio increased by 0.4.

4. Enterprise Value to EBITDA =market value of equity + Debt - cash

Years 2008 2009 2010

Calculation

s

40994 + 562 - 7764 18,468 + 1898 -

8352

26517.35 + 3417 -

10635

Results 33,782 12,014 19,299.35

The enterprise value to EBITDA assess the value of the underlying Dell’s assets,

unencumbered by debt and separate from any cash and marketable securities,

where the enterprise value of dell decreased from year 2008 to year 2009, then a

slight increase in 2010.

5. EPS = Net Income / Shares Outstanding

Years 2008 2009 2010

Calculation

s

2,947 / 2,060 2,478 / 1,944 1,433 / 1,957

Results 1.4 1.3 0.7

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The net income represents the total earnings of the firm’s equity holders, where

the earning per share (EPS) provides a general idea about the net income

available for shareholders. Dell EPS for 2009 decreased compared to 2008,

while in 2010 it continued to decrease but with a huge fraction.

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Historical prices: 1

Prices

Date Open High Low Close Average Volume

Jan 31, 2008 20.12 21.18 18.87 19.90 34,829,400

Mar 3, 2008 19.84 20.81 18.91 19.92 25,594,400

Jun 2, 2008 22.99 24.66 21.87 21.88 30,084,700

Sep 2, 2008 21.91 21.98 14.50 16.48 43,861,400

Dec 1, 2008 10.94 12.29 9.74 10.24 19,880,400

Jan 2, 2009 10.31 11.43 9.45 9.50 27,315,100

Mar 2, 2009 8.53 10.86 8.00 9.48 31,953,100

Jun 1, 2009 11.70 13.96 11.45 13.73 26,601,100

Sep 1, 2009 15.72 17.13 15.05 15.26 26,545,400

Dec 1, 2009 14.13 14.81 12.74 14.36 29,521,800

Jan 4, 2010 14.50 15.20 12.75 12.90 26,866,200

Mar 1, 2010 13.35 15.25 13.28 15.02 25,643,200

Jun 1, 2010 13.23 14.28 12.00 12.06 32,606,800

Sep 1, 2010 11.92 13.17 11.79 12.97 26,593,500

Dec 1, 2010 13.47 14.02 13.20 13.55 18,745,200

After observing Dell’s Inc. stock prices over the past three years, we could

conclude that there were ups and downs in the stock prices, especially a

noticeable drop in the prices during 2009, and then it increased in 2010 but didn’t

reach the prices of 2008.

1 Dell Inc. (DELL) Historical Prices, http://finance.yahoo.com/q/hp?s=DELL&a=01&b=1&c=2008&d=11&e=31&f=2010&g=m

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Industry average: 1

Description 1 Day Price

Change %

Market

CapP/E ROE %

Div. Yield

%

Sector: Technology 0.49 77871.4B 50.97 10.87 1.00

Industry: Personal Computers 0.30 325.1B 22.20 25.50 0.00

Companies

Apple Inc. (AAPL) 0.30 298.3B 21.46 35.28 0.00

Dell Inc. (DELL) 0.29 26.8B 13.35 34.50 NA

Description 

Long-Term

Debt to

Equity

Price to

Book

Value

Net

Profit

Margin %

(mrq)

Price to

Free Cash Flow

(mrq)

Sector: Technology 57.06 8.42 5.81 -280.72

Industry: Personal Computers 88.07 6.35 11.40 16.90

Companies

Apple Inc. (AAPL) NA 6.23 21.18 80.24

Dell Inc. (DELL) 88.07 3.93 5.34 205.31

1 Industry Browser - Technology - Personal Computers - Company List, http://biz.yahoo.com/p/811conameu.html

26

Conclusion

Comparison between both companies according to their ratios and

interpret the difference.

Analyze the performance of both company

The market-to-book ratio indicates which is “growth firm”( low

market-to-book ratio) and which is “value firm”(high market-to-book ratio)

Enterprise Value to EBITDA: Determine how the value of each

company changed over time period.

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