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FinancialStatementAnalysisofDell Final
FinancialStatementAnalysisofDell Final
FinancialStatementAnalysisofDell Final
Deepika Srivastava
Abu Dhabi University, Email: depkiamba@student.iul.ac.in
Supervised by:
Abstract
In this paper, the financial performance of the American technology company, Dell
Technologies was assessed via the use of four different types of financial ratios. To compute
these ratios, data was extracted from Yahoo Finance. The progression of each ratio was
studied over the period between 2016 – 2019. Four types of ratios were analyzed: Liquidity
ratios, Activity ratios, Debt Ratios, and Profitability Ratios. This analysis, along with
secondary Literature Review of articles from peer-reviewed journals, allowed for the
development of suggestions to further increase the stability of the company’s financial state.
Introduction:
headquarters in Texas, USA. It was founded in 1984 by Michael Dell from his dorm room
during his first year at the University of Texas. The Company was originally named PC’s
Limited, backed by USD 1,000 and the legendary vision that Michael Dell had that would
revolutionize the technology industry; reworking the designing, manufacturing, and selling of
technology from the ground up. Within three years, the company had produced and released
its first computer system, as well as opened its first subsidiary in the United Kingdom, finally
becoming a publicly-traded company in the following year and was officially renamed as the
further the shift of the company’s focus towards innovations, long term investments and the
company’s solutions strategy. Finally, in 2016, Dell merged with the EMC Corporation and
formed Dell Technologies as a result, followed by the concurrent renaming of the EMC
This paper will analyze the financial performance of Dell Technologies over the past four
years; from the year 2016, up until the year 2019. The analysis will consist of four different
types of ratios that will be studied throughout this paper, namely: Liquidity ratios, Activity
ratios, Debt Ratios, and Profitability ratios. Each of these ratios allows us to gain a proper
It is often observed that the implementation of sustainability practices is often lacking in the
finance and accounting sectors of a company in relevance to the other sectors in business
likely negative impression upon investors with a minimal finance background and minimal
occurrences (the negative side effects of which could have been easily contained), which in
turn leading to the deterioration of the company’s reputation for investors. One of the most
dependable methods of acquiring capital is by qualifying the stocks of the company within
the category of ‘green stock’; a massively supported segment of capital sources due to the
ever- growing global concerns regarding carbon emissions, depletion of natural resources,
global warming, etc. (Al-Shamsi & Nobanee, 2020) This can be achieved by Dell
renewables-based industries. One such example is the Electric Car industry, which reduces
The data detailing the elements of the balance sheet and income statement for Dell
Technologies for the period 2016 – 2019 was extracted directly from Yahoo Finance; a
section of Yahoo! that provides financial data and news alongside stock quotes, financial
statements, etc.
Table 1: Financial Data for Dell Technologies. (all numbers in USD, in thousands)
Liquidity Ratios:
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑅𝑎𝑡𝑖𝑜:
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
the capability of the company in meeting short term obligations via the use of cash or
currently available resources that can be converted to cash, allowing the company to keep
track of resources at hand, and know whether or not the available amount is adequate to meet
their needs and maintain financial stability. (Al Kendi, 2018) The current ratio provides an
understanding of the capability of the company to satisfy its obligations that are due within
one year, or within one operating cycle. The Quick ratio shows how able the company is in
satisfying its obligations that are due within one year by utilizing assets that can be converted
to cash or cash equivalents. The final liquidity ratio is the Cash ratio, wish specifies what
percentage of current obligations can be satisfied by already available cash and cash
Activity Ratios:
𝑆𝑎𝑙𝑒𝑠
𝑅𝑒𝑐𝑖𝑒𝑣𝑎𝑏𝑙𝑒 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟:
𝑅𝑒𝑐𝑖𝑒𝑣𝑎𝑏𝑙𝑒𝑠
𝑆𝑎𝑙𝑒𝑠
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟:
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
Activity ratios consist of Inventory turnover, Receivables turnover, and Total Asset Turnover.
These ratios determine how effectively and efficiently the resources of the company are
utilized over each year, and whether the effectively wasted amount of resources was
increasing or decreasing on a year-on-year basis. (Kieso, Kimmel, & Weygandt, 2009) The
Inventory turnover ratio shows how many times per year the inventory of the firm sold and
replaced. The Receivables turnover ratio shows how effectively a firm collects its due credit.
Finally, the Total Assets turnover ratio shows how well the assets are utilized to generate
𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
𝐷𝑒𝑏𝑡 𝑅𝑎𝑡𝑖𝑜:
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
The debt ratio is related to the capital structure of a company. The capital structure consists of
long-term debts, short term debts, preferred stocks, and common stocks. A sound and optimal
capital structure will allow the company to further optimize its performance as well as gain a
competitive edge in its industry. (Tan Vinh, 2019) The reasoning behind this is that the
company would be able to initiate campaigns or explore future endeavor options that may not
have been within their budget before acquiring proper financing, allowing them access to
opportunities that may yet be out of reach for their competitors. Debt Ratios consist of the
debt ratio, which states how much of the assets are financed through debt and the Times
Interest Earned Ratio, which shows how well a company can satisfy obligations regarding
Profitability Ratios:
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
𝑅𝑒𝑡𝑢𝑟𝑛 𝑂𝑛 𝐸𝑞𝑢𝑖𝑡𝑦:
𝐸𝑞𝑢𝑖𝑡𝑦
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
𝑅𝑒𝑡𝑢𝑟𝑛 𝑂𝑛 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠:
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛:
𝑆𝑎𝑙𝑒𝑠
The Profitability ratios elaborate upon the ability of a company to generate profits concerning
the total available assets, as well as the equity capital. (Nalurita, 2015) Profitability ratios
consist of Return on Assets (ROA), Return on Equity (ROE), and Profit Margin. ROA shows
the profitability of assets, while ROE shows profitability concerning equity. The profit
margin shows the percentage of revenue that consisted of profits for the company.
To achieve financial growth, it is imperative that incorporating and building upon the
sustainability element within the operations of the company should be one of the main
focusses. The main reason behind this is that the increase of the sustainability factor directly
correlates towards an increase in financial growth in terms of cost of capital, working capital
management, returns on investment, and capital budgeting. (Almansoori & Nobanee, 2019)
These practices allow the company to gain significant growth, while also allowing the
1. Liquidity Ratios:
Liquidity Ratios
90.00%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
a. Current Ratio:
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑅𝑎𝑡𝑖𝑜:
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
The Current Ratio can be seen increasing between the 2016 – 2017 period increasing by
4.2%, followed by a gradual decrease of a total of 14.4% during the 2017 – 2019 period.
Throughout the observation period, the overall decrease in the ratio was about 10.4%. This
signifies a decrease in the ability of the company to meet its short-term obligations;
b. Quick Ratio:
The Quick Ratio can be seen increasing between the 2016 – 2017 period increased by over
5%, followed by a gradual decrease of a total of over 15% during the 2017 – 2019 period.
Throughout the observation period, the overall decrease in the ratio was approximately 10%.
This signifies a decrease in the ability of the company to meet its short-term obligations
through the utilization of current assets; further contributing towards the decrease in overall
liquidity.
c. Cash Ratio:
𝐶𝑎𝑠ℎ
𝐶𝑎𝑠ℎ 𝑅𝑎𝑡𝑖𝑜:
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
The Cash Ratio can be observed to be increasing between the 2016 – 2017 period increased
by over 5.1%, followed by a substantial decrease of a total of over 17.4% during the 2017 –
2019 period. Over the four years, the overall decrease in the ratio was around 12.3%. This
signifies a decrease in the percentage of current obligations that could be satisfied by on-hand
cash and cash equivalents; further contributing towards the decrease in overall liquidity.
2. Activity Ratios:
Activity Ratios
25.00
20.00
15.00
10.00
5.00
0.00
a. Inventory Turnover:
It was noted that the Inventory Turnover Ratio increased during the 2016 – 2017 period;
increasing by over 2.7 times the inventory was replaced and sold. It was followed by a
significant decrease of over 3.9 turns during the 2017 – 2018 period, ending with a final,
relatively less substantial increase of 1.3 turns during the 2018 – 2019 period. Over the four
years that this ratio was observed, the overall increase in the ratio was approximately 0.09%;
minimal and negligible. This signifies an increase in the number of times the inventory was
sold and replaced during a single year; signifying a sense of stability in the efficiency of the
use of inventory, further expressing effective stock management and order forecasting.
b. Receivables Turnover:
𝑆𝑎𝑙𝑒𝑠
𝑅𝑒𝑐𝑖𝑒𝑣𝑎𝑏𝑙𝑒 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟:
𝑅𝑒𝑐𝑖𝑒𝑣𝑎𝑏𝑙𝑒𝑠
This ratio can be observed to be increasing throughout all four years, albeit conservatively,
increasing by a total of between 2016 and 2019. However, this is extremely favorable as it
𝑆𝑎𝑙𝑒𝑠
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟:
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
This ratio can be observed to be increasing by 0.29 turns over the first three years, followed
by a relatively small decrease of 0.03 turns in the final year of the observation period.
However, the ratio shows that Dell earns less than one US dollar for each US dollar worth of
assets. Nevertheless, the overall increase of 0.26 turns over the four years shows that Dell
Technologies are consistently improving their asset turnover. Thus, increasing the efficiency
3. Debt Ratios:
Debt Ratio
120.00%
100.00%
80.00%
60.00%
40.00%
20.00%
0.00%
2019 2018 2017 2016
a. Debt Ratio:
𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
𝐷𝑒𝑏𝑡 𝑅𝑎𝑡𝑖𝑜:
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
This ratio experienced a significant increase of 16.9% over the 2016 – 2018 period, reaching
a point where over 100% of assets were financed, creditors. However, the ratio decreased by
nearly 3.5% in the final year. This ratio increased by a total of over 13.4% during the
observation period. This indicates increasing dependence upon creditors to finance the
company’s assets.
1.00
0.50
-1.00
-1.50
-2.00
b. Times Interest Earned:
This ratio consistently increased throughout the observation period, increasing 2.84 times
over the four years it was observed. This indicates an increase in the ability of the company
4. Profitability Ratios:
ROE
100.00%
50.00%
0.00%
-50.00%
2019 2018 2017 2016
-100.00%
-150.00%
-200.00%
-250.00%
-300.00%
-350.00%
a. ROE:
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
𝑅𝑒𝑡𝑢𝑟𝑛 𝑂𝑛 𝐸𝑞𝑢𝑖𝑡𝑦:
𝐸𝑞𝑢𝑖𝑡𝑦
This ratio decreased by 27.34% between 2016 and 2017, followed by an increase of over 80%
in 2018 and ended by plummeting in the year 2019 by over 333.7%. However, this does not
necessarily mean that the company is not profitable. A detailed analysis of the ratio shows
that it is negative during 2016 and 2017 due to negative the loss experienced in those years.
However, in 2018, when the ratio seems to show an improvement by 80%, it is actually due
to both equity and Net Income being negative figures. Whereas in reality, this combination
shows ill implications towards the profitability of the company. Nonetheless, in the final year,
it can be noted that the negative figure of the ratio can be attributed to the negative equity,
while the company earned its only positive Net Income over the four years.
It can be concluded that the company has significantly improved its profitability over the four
years.
ROA
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
-1.00%
-2.00%
-3.00%
-4.00%
b. ROA:
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
𝑅𝑒𝑡𝑢𝑟𝑛 𝑂𝑛 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠:
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
The ratio can be seen decreasing by 1.64% between the years 2016 and 2017 but is observed
to consistently rise over the remaining observation period, increasing by 6.93% between 2017
– 2019. The overall increase between 2016 – 2019 was nearly 5.3%. This signifies the
increase
in the ability of the management of the company to generate income from available assets
and contributes towards the overall profitability of the company in a major and positive
manner.
Profit Margin
6.00%
4.00%
2.00%
0.00%
2019 2018 2017 2016
-2.00%
-4.00%
-6.00%
c. Profit Margin:
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛:
𝑆𝑎𝑙𝑒𝑠
The ratio is observed to decrease by 1.64over 2% during the period between 2016 - 2017 but
is observed to consistently rise over the remaining observation period (mirroring the ROA
ratio), increasing by 9.75% between 2017 – 2019. The overall increase between 2016 – 2019
was 7.72%. This signifies the increase in the proportion of revenue that constitutes the net
income of the company, further adding towards the overall profitability of the company.
Conclusion:
America. The operations consisted of selling personal computers, private computing data
storage, etc. It is one of the top companies worldwide with a business focus on technology.
Over the past 36 years, Michael Dell, the founder of the company, has brought to life his
analyzed thoroughly. The financial data required to carry out the analysis was extracted
directly from the company’s yahoo finance profile. The types of ratios that were used to
evaluate the financial performance of the company consist of Liquidity ratios, Activity ratios,
Liquidity ratios show how well the company can meet and satisfy obligations that have a
maturity of one year or less, as well as how well these short-term obligations can directly be
covered by cash or cash equivalents. The Liquidity Ratios consist of the Current Ratio, the
Quick Ratio, and the Cash Ratio. Each of these ratios was found to have decreased over the
past four years; indicating a decrease in liquidity due to a decrease in the ability to cover
Activity Ratios show how well the company manages its inventory, how effectively and
efficiently available assets are utilized, and how able the company is in collecting its dues.
These aspects are covered by the Inventory Turnover, Total Assets Turnover, and the
Receivables Turnover ratios, respectively. These ratios provide a general sense of the quality
of the management operations within the company. All three of these ratios were found to
have experienced significant increases over the past four years, depicting improved
management of inventory, utilizing available assets more effectively to generate revenue and
Debt ratios show what percentage of the assets were financed by creditors of the firm, as well
as how effectively the cost of borrowing (Interest) is covered from the earnings of the
company through its operations. The included ratios are Debt Ratio and Times Interest
Earned Ratio. The debt ratio saw an unfavorable increase over the past four years, exposing
the increased dependence of the company on creditors to acquire assets. However, the Times
Interest Earned
ratio saw a substantial increase over the observation period, portraying an increase in the
ability of the company to cover the interest payments through earing gained from operations,
Finally, the profitability ratios show a generation of income with total equity, total assets, and
the profit margin ratio. These ratios focus on how profitable both the equity and total assets
of the company are, as well as what percentage of the revenues were able to be converted to
net income. The included ratios are Return On Equity, Return On Assets, and Profit
Margin. Although the ROE seems to have plummeted within the final year, it still depicts
positive income and was negative due to the negative equity. Furthermore, the ROA and
Profitability Margin ratios were found to experience substantial increases over the 2016 –
2019 period as well. The overall profitability of the company increased over the observed
time frame.
The overall financial condition of the company, based on the data collected from Yahoo
finance and previously stated findings, is sound and is further expected to experience
Suggestions to increase the financial stability of the company are to incorporate the element
of sustainability of into the organizational culture to reduce costs and increase the profit
margin (and by proxy, overall profitability), direct future endeavors towards sustainability
projects related to the company’s operations to qualify as green stock and increase the
minimize the negative impact on the opinion of investors considering the company as an
investment opportunity.
Works Cited
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https://corporate.delltechnologies.com/en-us/about-us/who-we-are/timeline.htm
Velez-Pareja, I. (2012). Financial Analysis and Control - Financial Ratio Analysis. Social Science Research
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Kieso, D. E., Kimmel, P. D., & Weygandt, J. J. (2009). Accounting Pronciples. New York: Wiley.
Tan Vinh, N. (2019). The Impact of Competition on Debt Ratio of Manufacturing Enterprises in Vietnam.
Nalurita, F. (2015, October). THE EFFECT OF PROFITABILITY RATIO, SOLVABILITY RATIO, MARKET
Almansoori, Alia and Nobanee, Haitham, How Sustainability Contributes to Shared Value Creation and Firms’
http://dx.doi.org/10.2139/ssrn.3472411
Al-Mahmoud, Maha and Nobanee, Haitham, Sustainability and Accounts Receivable Management: A Mini-
http://dx.doi.org/10.2139/ssrn.3538711
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