Questions

1. 1)Assuming Depreciation₁₉₉₆, prepare Dell?s following financial data in 1996:
   1. a)Cash Flow Statement
   2. b)Sources & Uses Table.
   3. c)Explain how Dell financed its growth in 1996.
2. 2)Using the data provided in Table A, Exhibit 4 & 5, calculate the increase in:
   1. a)InventoryDellwouldhaveneeded
   2. b)The obsolescence loss it would incur if it operated at Compaq?s DSI levels in 1995 (Hint: ).
3. 3)Compare the Cash Conversion Cycles of Dell in 1995 and 1996.
   1. a)How did it change and why?
   2. b)Was Dell successful in reflecting its focus on Liquidity? (Hint: Use the balance of that year only instead of average balances, as 1994 numbers for Acc. Payable is not available)
4. 4)Prepare the proforma Balance Sheet and Income Statement for the targeted 50% increase in 1997 Sales. Analyze if Dell can finance this fast growth internally without raising Long-term Debt or Equity. (Hint: Assume Profit Margins and Turnover Days will not change, Depreciation is again zero and no Dividends will be distributed).
5. 5AssumingtheMinimumrequiredCash&S-TermInvestmentsofDellis$200mio,calculatethemaximumamountofDividendsDellcandistributein1997fromitsinternalsources.

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