Dell's Working Capital
Description Page #
Executive Summary 1
Research and Analysis
Dell’s Competitive Advantage
Funding 52% Growth in 1996
Funding 50% Growth in 1997 3
Exhibit 1: Dell’s Annual Worldwide Sales Dollar Growth Versus Industry
Exhibit 2: DSI Comparison of Dell, IBM, and Compaq
Exhibit 3: Working Capital Financial Ratios for Dell
Exhibit 4: Percent of Dell Computer Systems Sales by Microprocessor
Exhibit 5: Profit & Loss Statements for Dell Computer Corporation
Exhibit 6: Balance Sheets for Dell Computer Corporation
Exhibit 7: Projected Balance Sheet of Dell Computer Corporation for 1996
Exhibit 8: Projected Balance Sheet of Dell Computer Corporation for 1997 …show more content…
Additional inventory at Compaq’s DSI = (Dell’s COS) (Compaq’s DSI – Dell’s DSI)/360 days = [($2,737) (73-32)]/360 = $312 million.
This $312 million, in perspective, represents 59% of Dell’s cash and short term investments, 48% of stockholder equity and 209% of its 1995 income, as shown in Exhibit 4 and 5.
The build to order set up also enabled Dell to easily make changes to their systems as new updates were available. This was extremely evident in 1994 when Intel Corporation found that their chip was flawed. Unlike Dell, the competition had so much inventory that it had to continue to sell the flawed systems. Dell was able to start selling their new systems with the unflawed chips.