Financial Statement Analysis Paper
as a percentage of revenues. Dell is well managed and knows how to control their costs. The
company is on top of every detail and there are no surprise costs to harm the company. (Part 2,
Item 7, Form 10-K, Dell Inc. 2011)
The net income performance of the company has been excellent for fiscal 2011 with an
84% increase from the previous year. This big increase in net income resulted in a 1.6% growth
in profit margin and a 2.5% growth in ROA (return on asset). Higher revenues and good cost
control are responsible for these growths. Another reason for the growth in net income is the
change in the business operation of the company. Its service operations are expanding and have a
lower cost than manufacturing the products. Fiscal 2010 had a decrease in net income of 42.2%
mainly due to the drop in revenue and the acquisition of Perot Systems. Dell is planning to keep
expanding specially on the services aspect of their business, which will help the company on the
long run. (Part 2, Item 7, Form 10-K, Dell Inc. 2011)
Current assets accounts increased $4,776 billion from the previous year, from
representing 72% of total assets in fiscal 2010 to 75.2% in fiscal 2011 (a 3.2% growth). The cash
and cash equivalent account is mostly responsible for this change as the account rose by more
than $3 billion or 4.4% of total assets. The company recognizes all highly liquid investments,
including credit card receivables due from banks, with original maturities of three months or less
at date of purchase. This rise is explained by an increase in revenues so cash provided by
operations, and mainly by a decrease in cash used in investing activities. Cash used for investing
activities totaled $1.165 billion in fiscal 2011, a $2,644 billion drop from fiscal 2010. The
decrease is primarily due to the lack of material importance for the acquisitions in fiscal 2011
compared to the acquisition of Perot Systems in fiscal 2010. This also reflects lower proceeds
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