Dell vs. Hp Performance & Finanical Analysis

Short Term Investments – totaled $220,000.00 in year 6, a gain of $21,500.00 or +10.8%.

Once again both companies have seen a reduction in this ratio over the past two years, meaning that the company were less effective in ’generating sales from [it’s] assets’. (Leopold, A et al, 1999, 249).

Cost – HD’s cost of goods sold has increased from 1991 to 1995 due to expansion of production. Similarly, the cost of selling, admin and engineering has also increased.

replacing some of the existing equity by issuing more debt will increase the value of the firm. If

Balance Sheet – Our cash position at March 31, 2016 was at 95.9 Days of Cash on Hand, although there were 44.3 offsetting days in third-party reserves. Days in Accounts Receivable were at 60.6 days due to several staff vacancies. Our current Debt Service Coverage Ratio was at 4.20-to-1, well in excess of the minimum covenant requirement

Based on the above considerations, the Ke ratio of the merger company will be 11.54%. Furthermore, for the revenue growth and ROE of the merger company, there are more risks than benefits. HP’s revenue may have a recession curve in the short term. Although the merger will bring cost savings of $2.5 billion, HP cannot realize these expected benefits immediately. Other than this, there were questions on the organization culture as well. If HP could not manage its organization properly, integration would only add on to the difficulties. The biggest factor of all is that to integrate the culture existing in the two companies would be a very difficult job. Based on all the considerations, we assume that the revenue growth rate after the merger would be 3.5% and the ROE would be 11%. And as a result, the combined stock price would be 9.0. (See Exhibit 3).

Explanations: 5. b. Gross profit = $2,505 (Sales revenue $4,319 – Cost of goods sold $1,814)

From 1976 to 1982 the compound annual growth in net sales was 18.5% and the compound annual growth of after tax profit was 25.9%. Therefore, a 10% net sales growth shown in the proforma financial data seems reasonable.

The company’s current assets are just over two times its current liabilities, giving it a current ratio of 2.08. This is a sign of financial strength. The Quick ratio (current assets-inventory then divided by current liabilities) is 0.96. This measures the company’s ability to come up with cash in a matter of hours to days. It has working capital (current assets-current liabilities) of $7,508,998. With a working capital per dollar of sales of 15%. This is adequate given the high inventory turn.

Revenues of Dell increased on 1285% against 660% of Compaq (1992-1998). From this data it can be seen that at Dell net income gross exceeds the revenue gross, while Compaq didn 't succeed to use the revenues incline to make income.

The following financial data illustrates the firm’s short-term ability to pay maturing obligations and to meet unexpected needs for cash:

7. Debt to capitalization = Long-term Debt in Balance Sheet / Long term debt + Net Assets in

While financial statements can be quite extensive, it is important for companies to completely understand all aspects of their statements. In regards to the balance sheet, there are financial ratios that can be computed in order to determine the profitability, liquidity, and solvency of a company. Both Ford and Tesla are large car companies that have lots of assets. By examining the current ratio for both companies, accountants, investors and creditors can assess the liquidity and efficiency for Tesla and Ford to pay off their short-term liabilities with its current assets. The current ratio is a very significant measure tool as these short-term liabilities would be due within the next year. Thus, the companies have a limited time to acquire the funds necessary to pay off the liabilities. Current assets such as cash or cash equivalents can be easily liquidated. Typically, assets on the balance sheet are listed in order of easiest liquidity. If companies have large current assets, then they will be able

The long-term liquidity risk ratio such as LT debt/Equity, D/E, and Total Liabilities to Total Assets all show a decline from year 2005 due to the repayment of debts. The interest coverage ratio also shows a healthy number of 29.45 in comparison to the industrial average of 15.04 indicating a high ability to pay out its interest expense. Such a low relative risk is not surprising due to the nature of its business depending heavily in R&D development and large intangible assets.

Although both companies have diversified into other industries, PC industry is still their most important source of revenue. For years, these two giants are battling for lead in PC market. When measured by market share, HP has taken place of Dell as No.1 seller in PC market since 2007 (FIGURE 1). When measured by revenue, HP also wins over Dell for almost five years (FIGURE 2). Also, Acer grew rapidly in market share partly because of its merger with Gateway in 2007 (Einhorn 2007), and almost matched Dell in 2009.