Financial Statement Analysis Paper
Industry
Measures
Jan-11
Jan-10
Jan-09
Product
Revenue
$ 50,002.0
81.31%
$ 43,697
82.60%
$ 52,337
85.66%
Services
Revenue
$ 11,492.0
18.69%
$ 9,205
17.40%
$ 8,764
14.34%
Total
Revenue
$ 61,494.0
100.00%
$ 52,902
100.00%
$ 61,101
100.00%
Revenues come from the sale of Dell’s products and services. Revenues increased a
combined 16% from January 2010 to January 2011 primarily because of the recovery in the
economy. The health of the economy is critical for the company because its products are not
primary products; so during a recession, people will rather save money for food than buy a
computer. This explains the big decline in revenues for the 2009 fiscal year (a 13.4% drop
compared to the previous year). The increase in 2010 is also due to a change in business strategy.
Dell is growing its enterprise solutions and services business which changed the revenue stream
of the company. Services revenue has weighted more on total revenues year after year. It went
from 14.3% of revenues in January 2009 to 18.7% of revenues in January 2011. Also, services
revenue has been profitable with a 25% growth in 2010 and 5% growth in 2009. (Part 2, Item 7,
Form 10-K, Dell Inc., January 2011)
Cost of goods and services have been relatively stable as a percentage of revenue for the
past three years. Other expenses such as selling and administrative expenses, R&D expenses,
depreciation expenses and more have also been relatively constant in the last three years.
However, the company did have higher costs on a dollar basis. This increase in amortization of
intangible assets and other cost is due to the increase in intangible assets from the Perot Systems
in Fiscal 2010. Also, the company had a migration to contract manufacturers and closures of
certain manufacturing facilities that caused an increase in severance and facility action costs.
Even with all these value increases, the company has done a good job keeping their costs stable
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