Financial Statement Analysis Paper
from sales of investments and property (partly offset by lower capital expenditures). (Part 2, Item
8 & 9, Form 10-K, Dell Inc. 2011)
In general, the company had a good fiscal year. It improved its ability to generate profit.
All three of the main profitability’s ratio (profit margin, return on assets and return on equity)
have increased from the previous year; it means that the company is using its resources more
efficiently. Contingencies such as lawsuits and federal, state and local regulations are reasonably
possible because they are not in Dell’s control and can occur at any time; the company believes
that they will have a material adverse effect on its financial condition or results of operations if
some of them occur. Also, the company received an unqualified opinion by its auditor,
PricewaterhouseCoopers LLP, who is responsible to obtain reasonable assurance about whether
the financial statement are free of material misstatement and verify the internal control of Dell
over financial reporting. (Part 2, Item 8, Form 10-K, Dell Inc. 2011)
The property, plant and equipment (PPE) account is not very heavy in the company’s
balance sheet. It only represents 5.1% of Dell’s total assets. The company uses lease and cash to
acquire PPE. As of January 2011, Dell had approximately 18.1 million square feet of office,
manufacturing, and warehouse space worldwide, with 8.3 million of these square feet located in
the U.S. Also, 68% of these square feet are owned by Dell and the rest of the 32% are leased.
Depreciation is provided using the straight-line method over the estimated economic lives of the
assets, which range from ten to thirty years for buildings and two to five years for all other
assets. Leasehold improvements are amortized over the shorter of five years or the lease term.
During Fiscal 2011, the company closed a manufacturing plant in Winston-Salem (North
Carolina), consolidated space on their Austin (Texas) campus that allowed them to close one
building, and sold their fulfillment center in Nashville (Tennessee). Currently, a business center
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