Financial Statement Analysis Mini-Project The financial analysis project is designed to develop your ability to (1) understand and analyze published financial reports and (2) make a recommendation to investors regarding the financial condition of a public company. This project can be completed entirely in Microsoft Excel. You should use the appropriate financial statements, and can include those statements in the Excel file with cell references in the formulas to guard against mathematical errors. It is important to fully address the question being asked. When answering the questions, make sure to double-check your calculations. Be sure to include your results as well as a detailed explanation/interpretation of the information. Any use of outside reference materials should be cited. 1. Calculate the following ratios needed to assess liquidity and interpret the results. This should include the last 3 years of ratios for the company and the last 3 years of ratios for the competitor. What trends are there? (approx. 1/2 page single spaced 12 pt. in Word doc) a. Current Ratio b. Acid-Test (Quick) Ratio c. Receivables Turnover d. Inventory Turnover e. Asset Turnover 2. Calculate the following ratios needed to assess long-term debt-paying ability and interpret the results. This should include the last 3 years of ratios for the company and the last 3 years of ratios for the competitor. What trends are there? (approx. 1/2 page single spaced 12 pt. in Word doc) a. Times Interest Earned b. Debt to Total Assets Ratio c. Book Value per Share 3. Calculate the following ratios needed to assess profitability and interpret the results. This should include the last 3 years of ratios for the company and the last 3 years of ratios for the competitor. What trends are there? (approx. 1/2 page single spaced 12 pt. in Word doc) a. Profit Margin on Sales b. Rate of Return on Assets c. Rate of Return on Common Stock Equity d. Earnings per Share e. Payout Ratio 4. Which company would you invest in? What are the reasons for your decisions? This should be based on financial analysis and significant facts. (approx. 1 page single spaced 12 pt. in Word doc) Attached files: Balance sheets and Income Statements for Dell and HP

Hewlett-Packard Co (NYS: HPQ) Exchange rate used is that of the Year End reported date As Reported Annual Balance Sheet Report Date 10/31/201 10/31/201 4 3 Currency USD USD Audit Status Not Not Qualified Qualified Consolidated Yes Yes Scale Millions Millions Cash & cash equivalents 15133 12163 Available for sale debt securities Short-term investments Accounts receivable, gross 14064 16208 Allowance for doubtful accounts 232 332 Accounts receivable 13832 15876 Financing receivables, gross Allowance for doubtful accounts Financing receivables Financing receivables 2946 3144 Finished goods 3973 3847 Purchased parts & fabricated assemblies 2442 2199 Inventory 6415 6046 Deferred tax assets - short-term 2754 3893 Value-added taxes receivable from various governments 2169 2425 Supplier & other receivables 2378 2579 Prepaid & other current assets 4518 4238 Other current assets 11819 13135 Total current assets 50145 50364 Land 540 626 Buildings & leasehold improvements 9048 8942 Machinery & equipment, including equipment held for lease 16664 16565 Property, plant & equipment, gross 26252 26133 Accumulated depreciation 14912 14670 Property, plant & equipment 11340 11463 Financing receivables, net 3613 3878 Deferred tax assets - long-term 740 1346 Deferred costs - long-term 755 999 Other long-term financing receivables & other assets 3346 3333 Long-term financing receivables & other assets 8454 9556 Goodwill 31139 31124 Purchased intangible assets Intangible assets 2128 3169 Total assets 103206 105676 Current portion of long-term debt 2655 5226 Commercial paper 298 327 Notes payable to banks, lines of credit & other short-term borrowings426 533 Notes payable & short-term borrowings 3486 5979 Accounts payable 15903 14019 Employee compensation & benefits 4209 4436 Taxes on earnings 1017 1203 Deferred revenues 6143 6477 Accrued restructuring 898 901 Other accrued taxes 2269 2703 Accrued warranty 1325 1390 Accrued sales & marketing programs 2986 2823 Other accrued liabilities 5499 5590 Other accrued liabilities 12079 12506 Total current liabilities 43735 45521 U.S. dollar global notes 17837 20684 EDS senior notes 313 314 Other long-term debt, including capital lease obligations 424 689 Fair value adjustment related to hedged debt 120 147 Less: current portion 2655 5226 Long-term debt 16039 16608 Pension, post-retirement, & post-employment liabilities 6379 5098 Long-term deferred revenue 3931 3907 Deferred tax liability - long-term 1124 2668 Tax liability - long-term 2861 Other long-term liabilities 2010 4218 Other liabilities 16305 15891 Common stock 18 19 Additional paid-in capital 3430 5465 Retained earnings 29164 25563 Net unrealized gains (loss) on available-for-sale securities 81 76 Net unrealized gain (loss) on cash flow hedges08 1 -188 Unrealized components of defined benefit pension plans Unrealized components of defined benefit plans -5376 -3084 Cumulative translation adjustment -694 -582 Accumulated other comprehensive income (loss) -5881 -3778 Total Hewlett-Packard Co. stockholders' equity 26731 27269 Non-controlling interests 396 387 Total stockholders' equity 27127 27656 10/31/201 2 USD Not Qualified Yes Millions 11301 16871 464 16407 3252 4094 2223 6317 3783 3298 2549 3730 13360 50637 636 8744 16503 25883 13929 11954 4292 1581 1301 3419 10593 31069 4515 108768 5744 365 538 6647 13350 4058 846 7494 771 3264 1496 2900 5840 13500 46666 25031 1423 680 399 5744 21789 7780 3371 2948 3381 17480 20 6454 21521 87 -99 -5090 -457 -5559 22436 397 22833 10/31/201 1 USD Not Qualified Yes Millions 8043 18694 470 18224 3220 58 3162 4869 2621 7490 5374 2480 2762 3486 14102 51021 687 8620 16155 25462 13170 12292 4015 1283 5457 10755 44551 10898 129517 4345 3215 523 8083 14750 3999 1048 7449 654 2414 1773 3317 6955 14459 50442 24082 1435 836 543 4345 22551 5414 3453 5163 3490 17520 20 6837 35266 37 -41 -3109 -385 -3498 38625 379 39004 10/31/201 0 USD Not Qualified Yes Millions 10929 5 5 19006 525 18481 3050 64 2986 4431 2035 6466 5833 3366 2737 3381 15317 54184 530 8523 13874 22927 11164 11763 3584 2070 6571 12225 38483 7848 124503 2216 4432 398 7046 14365 4256 802 6727 911 3216 1774 3374 6932 15296 49403 14515 1445 845 669 2216 15258 6754 3303 5239 3765 19061 22 11569 32695 20 -201 -3225 -431 -3837 40449 332 40781 Hewlett-Packard Co (NYS: HPQ) Exchange rate used is that of the Year End reported date As Reported Annual Income Statement Report Date Currency Audit Status Consolidated Scale Products revenue Services revenue Financing income Total net revenue Cost of products Cost of services Financing interest Research & development expenses Selling, general & administrative expenses Amortization of intangible assets Amortization of purchased intangible assets Impairment of goodwill & purchased intangible assets Restructuring charges Acquisition-related charges Total operating expenses Earnings (loss) from operations Interest & other income (expense), net Total interest & other income, net Earnings (loss) before taxes - U.S. Earnings (loss) before taxes - non-U.S. Earnings (loss) before taxes Current U.S. federal taxes provision (benefit) Deferred U.S. federal taxes provision (benefit) Current non-U.S. taxes provision (benefit) Deferred non-U.S. taxes provision (benefit) Current state taxes provision (benefit) Deferred state taxes provision (benefit) Provision for (benefit from) taxes Net earnings (loss) Weighted average shares outstanding - basic Weighted average shares outstanding - diluted Year end shares outstanding Net earnings (loss) per share - basic Net earnings (loss) per share - diluted Cash dividends declared per share Total number of employees Number of common stockholders 10/31/2014 USD Not Qualified 10/31/2013 USD Not Qualified 10/31/2012 USD Not Qualified 10/31/2011 USD Not Qualified 10/31/2010 USD Not Qualified Yes Millions 73726 37327 401 111454 56469 28093 277 3447 13353 1000 1619 11 104269 7185 -628 2565 3992 6557 381 210 984 -42 212 -201 1544 5013 1882 1912 1839.288 2.66 2.62 0.61 302000 95719 Yes Millions 72398 39453 447 112298 55632 30436 312 3135 13267 1373 990 22 105167 7131 -621 2618 3892 6510 475 -666 1275 89 57 167 1397 5113 1934 1950 1907.883 2.64 2.62 0.55 317500 100804 Yes Millions 77887 42008 462 120357 59468 32600 317 3399 13500 1784 18035 2266 45 131414 -11057 -876 -3192 -8741 -11933 330 81 1139 -787 -41 -5 717 -12650 1974 1974 1962.838 -6.41 -6.41 0.5 331800 104900 Yes Millions 84757 42039 449 127245 65167 32056 306 3254 13466 1607 885 645 182 117568 9677 -695 3039 5943 8982 390 -590 1177 611 141 179 1908 7074 2094 2128 1990.506 3.38 3.32 0.4 349600 111200 Yes Millions 84799 40816 418 126033 65064 30723 302 2959 12585 1484 1144 293 114554 11479 -505 4027 6947 10974 484 231 1345 21 187 -55 2213 8761 2319 2372 2203.898 3.78 3.69 0.32 324600 118100 Dell Inc (NMS: DELL) Exchange rate used is that of the Year End reported date As Reported Annual Balance Sheet Report Date Currency Audit Status Consolidated Scale Cash & cash equivalents Short-term investments Gross accounts receivable Allowance for doubtful accounts Accounts receivable, net Short-term financing receivables, net Production materials Work-in-process Finished goods Inventories, net Other current assets Total current assets Computer equipment Total computer equipment Land & buildings Machinery & other equipment Total machinery & other equipment Total property, plant & equipment Accumulated depreciation & amortization Total accumulated depreciation & amortization Property, plant & equipment, net Long-term investments Long-term financing receivables, net Goodwill Purchased intangible assets, net Other non-current assets Total assets Commercial paper Short-term structured financing debt Current portion of long-term debt Other short-term debt Short-term debt Short-term debt Accounts payable Accrued compensation Accrued warranty liability Accrued income taxes Accrued income & other taxes Other accrued & other current liabilities Accrued & other current liabilities Short-term deferred revenue Total current liabilities Notes Senior debentures India term note Indenture Structured financing debt Total debt Less: current portion of long-term debt Long-term debt Long-term deferred revenue Warranty liability Unrecognized tax benefits, net Deferred tax liabilities Income taxes All other non-current liabilities Other non-current liabilities Other non-current liabilities Total liabilities Common stock & capital in excess Treasury stock, at cost Retained earnings Accumulated other comprehensive income (loss) Total Dell stockholders' equity Noncontrolling interest Total liabilities & stockholders' equity B 02/01/2013 02/03/2012 01/28/2011 USD Not Qualified Yes Thousands USD Not Qualified Yes Thousands USD Not Qualified Yes Thousands 12569000 208000 6701000 72000 6629000 3213000 593000 283000 506000 1382000 3967000 27968000 2591000 1957000 752000 5300000 3174000 2126000 2565000 1349000 9304000 3374000 854000 47540000 1807000 416000 1618000 2000 3843000 11579000 1182000 492000 807000 1163000 3644000 4373000 23439000 5609000 379000 872000 1618000 5242000 3971000 270000 2908000 918000 91000 4187000 36839000 12554000 32145000 30330000 -59000 10680000 21000 10701000 13852000 966000 6539000 63000 6476000 3327000 753000 239000 412000 1404000 3423000 29448000 2309000 1843000 782000 4934000 2810000 2124000 3404000 1372000 5838000 1857000 490000 44533000 1500000 440000 924000 3000 2867000 11656000 1604000 572000 432000 1326000 3934000 3544000 22001000 6007000 384000 920000 924000 6387000 3836000 316000 2563000 405000 108000 3392000 35616000 12187000 31445000 28236000 -61000 8917000 8917000 13913000 452000 6589000 96000 6493000 3643000 593000 232000 476000 1301000 3219000 29021000 2275000 2275000 1674000 780000 780000 4729000 2776000 2776000 1953000 704000 799000 4365000 1495000 262000 38599000 850000 1000 851000 11293000 1550000 575000 529000 1527000 4181000 3158000 19483000 4507000 389000 250000 5146000 3518000 2686000 30833000 11797000 28704000 24744000 -71000 7766000 - 01/29/201 0 USD Not Qualified Yes Thousand s 10635000 373000 5952000 115000 5837000 2706000 487000 168000 396000 1051000 3643000 24245000 2118000 2118000 1686000 848000 848000 4652000 2471000 2471000 2181000 781000 332000 4074000 1694000 345000 33652000 496000 164000 3000 663000 11373000 1112000 593000 0 2179000 3884000 3040000 18960000 2999000 394000 24000 3417000 3029000 2605000 28011000 11472000 27904000 22110000 -37000 5641000 - 01/30/200 9 USD Not Qualified Yes Thousand s 8352000 740000 4843000 112000 4731000 1712000 454000 150000 263000 867000 3749000 20151000 1967000 1967000 1544000 999000 999000 4510000 2233000 2233000 2277000 454000 500000 1737000 724000 657000 26500000 113000 8309000 817000 721000 6000 2244000 3788000 2649000 14859000 400000 1498000 1898000 1898000 3000000 314000 1738000 420000 2472000 22229000 11189000 27904000 20677000 309000 4271000 - Dell Inc (NMS: DELL) Exchange rate used is that of the Year End reported date As Reported Annual Income Statement Report Date Currency Audit Status Consolidated Scale Net revenue - products Net revenue - services, including software related Total net revenue Cost of net revenue - products Cost of net revenue - services, including software related Total cost of net revenue Gross margin Selling, general & administrative expenses Research, development & engineering expenses In-process research & development expenses Total operating expenses Operating income Investment income, primarily interest Gains (losses) on investments, net Interest expense Foreign exchange Other interest & other income (expense) Interest & other income (expense), net Income before income taxes - United States Income before income taxes - foreign Income (loss) before income taxes Current domestic income tax provision (benefit) Current federal income tax provision (benefit) Current state/local income tax provision (benefit) Current foreign income tax provision (benefit) Total current income tax provision (benefit) Deferred domestic income tax tax provision (benefit) Deferred federal income tax tax provision (benefit) Deferred state/local income tax provision (benefit) Deferred foreign income tax provision (benefit) Total deferred income tax provision (benefit) Income tax provision (benefit) Net income (loss) Weighted average shares outstanding - basic Weighted average shares outstanding - diluted Year end shares outstanding Net earnings (loss) per common share - basic Net earnings (loss) per common share - diluted Cash dividends declared per common share Number of regular employees Number of temporary employees Total number of employees Number of common stockholders 02/01/2013 02/03/2012 01/28/2011 01/29/2010 01/30/2009 USD Not Qualified Yes Thousands USD Not Qualified Yes Thousands USD Not Qualified Yes Thousands USD Not Qualified Yes Thousands USD Not Qualified Yes Thousands 44744000 12196000 56940000 36683000 8071000 44754000 12186000 8102000 1072000 9174000 3012000 100000 35000 270000 -18000 -18000 -171000 24000 2817000 2841000 630000 76000 191000 897000 -297000 -23000 -108000 -428000 469000 2372000 1745000 1755000 1738000 1.36 1.35 0.16 108800 2500 111300 26526 49906000 12165000 62071000 39689000 8571000 48260000 13811000 8524000 856000 9380000 4431000 81000 8000 279000 5000 -6000 -191000 4240000 375000 81000 273000 729000 62000 -12000 -31000 19000 748000 3492000 1838000 1853000 1761000 1.9 1.88 106700 2700 109400 28041 50002000 11492000 61494000 42068000 8030000 50098000 11396000 7302000 661000 7963000 3433000 47000 6000 199000 4000 59000 -83000 3350000 597000 66000 97000 760000 -95000 9000 41000 -45000 715000 2635000 1944000 1955000 1918000 1.36 1.35 100300 3000 103300 29320 43697000 9205000 52902000 37534000 6107000 43641000 9261000 6465000 624000 7089000 2172000 57000 2000 160000 -59000 12000 -148000 2024000 527000 116000 643000 -12000 -40000 -52000 591000 1433000 1954000 1962000 1957000 0.73 0.73 94300 1700 96000 30125 61101000 50144000 10957000 7102000 663000 2000 7767000 3190000 180000 -10000 93000 115000 -58000 134000 3324000 465000 295000 86000 846000 2478000 1980000 1986000 1944000 1.25 1.25 76500 2400 78900 29542