Financial Statement Analysis Paper
in Coimbatore, India and a data center in Washington are under construction. The company has
also announced the sale of its manufacturing facility in Lodz, Poland. All these activities during
fiscal 2011 resulted to a drop of 1.4% in PPE. The fixed asset turnover ratio is 31.5 times,
compared to 24.3times in the previous year. This big jump shows that the company is using its
fixed assets more efficiently to generate revenue and it’s a positive aspect for the future. The
company is increasing revenues by offering various services that require less fixed assets. It’s a
change in their business operations and a shift of their revenue stream. (Part 1 & 2, Item 2 & 8,
Form 10-K, Dell Inc. 2011)
Another strong aspect of the company’s operations is its liquidity. As current assets
increased and current liabilities decreased, both current ratio and quick ratio increased from 1.28
and 1.22 in fiscal 2010 to 1.49 and 1.42 respectively. On a dollar standpoint current liabilities
stayed relatively stable. However, due the increase in total assets, current liabilities decreased
5.8% as percentage of total assets. These changes help Dell become more liquid and this is
definitely an advantage. (Part 2, Item 8, Form 10-K, Dell Inc. 2011)
The Company generally borrows on a long-term basis and is exposed to the impact of
interest rate changes and foreign currency fluctuations. The fair value of its debt obligations at
January 28, 2011 totaled $5.1 billion, compared with $3.4 billion at January 29, 2010. The net
increase in fiscal 2011 was primarily due to net issuances of approximately $1.5 billion. No debt
is maturing in fiscal 2012. This gives the company a little room to breathe and not issue any
commercial paper or long-term debt to refinance maturing debts. The Company uses derivative
instruments such as forward contracts and purchased options to hedge certain foreign currency
exposures, and interest rate swaps to manage the exposure of its debt portfolio to interest rate
risk. As stated in its 10-K document: “Dell's objective is to offset gains and losses resulting from
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