Dell’s Working Capital: Summary Essay

Dell's Working Capital


Dell Laptop Corporation was founded in 1984 by a nineteen years old guy whose brand is Michel Dell. Dell started to marketplace and sells its own product by cost-free telephone line then shipping directly to the customers which is the primary strategy of Dell to get selling goods. They were advertising for their items in laptop trade mag then they produce a catalog for their goods. Dell was your first to supply toll-free telephone and on-site support to get technical complications so he can differentiate in customer services. Problem Description

Can Dell maintain a growth rate of 50% so that it can beat the industry progress rate prediction? Also, how can we organise the funding to support this kind of growth charge? Assumption

Let me assume most of the figures to be as it was in 1996 although I will refer to some of the crucial figures below: 1 . Dell will carry on and operate with all the same effectiveness.

2 . Major margin will continue to be 20. 1% of the sale.

3. Products on hand level will continue in 10% to 20% of sale.

5. Cash and short term expenditure will be 12% as preceding year. 5. Tax price will continue at 30%.


We will use percentage of sales method to calculate the pro-forma Income Statement & Balance Sheet and as will be shown which the sales will increase by 33. 33% to be $408 , 000, 000 in 97.

Pro-Forma Income Statement of Dell Laptop Corporation

in Millions of Dollars

1997% of sale19961995

Sales7, 944 5, 2963, 475

Expense of Sales6, 34379. 9%4, 2292, 737

Gross Margin 1, 601 one particular, 067738

Working Expense you, 03513. 0%690489

Operating Cash flow 566 377249

Financing & Other90. 1%6-36


Cash flow Taxes16730. 0%11164

Net Profit408 272149

Pro-Forma Balance Sheet of Dell Pc Corporation

in Millions of Dollars

1997% of sale19961995

Current Property

Cash 831. 0%5543

Short Term Investments88711. 2%591484

Accounts Receivables, net1, 08913. 7%726538

Inventories6448. 1%429293

Other2342. 9%156112...

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