The questions that should be addressed in the second section of the paper are as follows.
- If you were an accountant for a potential vendor for this company, explain which of these ratios would be of the most interest to you. Would there also be a second ratio of interest to you?
- If you were an accountant for a potential investor in this company, explain which of these ratios would be of the most interest to you. In your opinion, what other ratio or ratios beyond the ones listed above should also be considered in an investment context?
- What is your overall opinion of this company based on the limited analysis completed via the four ratios? Feel free to mention any questions that you feel should still be considered in view of the ratios or the changes from one year to the next.
- Compute the following for each of the two most recent years.
- Profit margin
- Return on shareholders' equity
- Current ratio
- Interest coverage ratio
DELL TECHNOLOGIES INC. Consolidated Statements of Financial Position (in millions; unaudited) January 29, 2021January 31, 2020 ASSETS Current assets: : Cash and cash equivalents S 14,201 S 9,302 Accounts receivable, net 12,788 12,484 Short-term financing receivables, net 5,155 4,895 Inventories, net 3,402 3,281 Other current assets 8,021 6,008 Total current assets Property, plant, and equipment, net Long-term investments Long-term financing receivables, net Goodwill 43,567 6.431 1,624 5,339 40.829 14,429 11,198 36,868 6,055 864 4,848 41,691 18,107 10,428 Intangible assets, net Other non-current assets Total assets $ 123,415 5 118,861 LIABILITIES, REDEEMABLE SHARES, AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt $ 6,382 7.737 Accounts payable 21,698 20,065 Accrued and other 9,549 9,773 Short-term deferred revenue 16,525 14,881 Total current liabilities Long-term debt Long-term deferred revenue Other non-current liabilities 54,132 41,822 14,276 5,360 52,456 44,319 12,919 5,383 Total liabilities 115,390 472 115,077 629 Redeemable shares Stockholders' equity (deficit) Total Dell Technologies Inc. stockholders' equity (deficit) Non-controlling interests 2,479 (1.574) 5,074 4,729 Total stockholders' equity 7,553 3,155 Total liabilities, redeemable shares, and stockholders equity S 123,415 5 118,861 February 1, 2019 S 70,707 19.914 90,621 DELL TECHNOLOGIES INC. CONSOLIDATED STATEMENTS OF INCOME (LOSS) (in millions, except per share amounts) Fiscal Year Ended January 29, 2021 January 31, 2020 Net revenue: Products 69,911 $ 69,918 $ Services 24,313 22,236 Total net revenue 94,224 92,154 Cost of net revenue: Products 55,347 54,525 Services 9,460 8,696 Total cost of net revenue 64,807 63,221 Gross margin 29,417 28,933 Operating expenses: Selling, general, and administrative 18,998 21,319 Research and development 5,275 4,992 Total operating expenses 24,273 26,311 Operating income (loss) 5,144 2,622 Interest and other, net (1,474) (2.626) Income (loss) before income taxes 3,670 (4) Income tax expense (benefit) 165 (5,533) Net income (loss) 3,505 5,529 Less: Net income attributable to non-controlling interests 255 913 Net income (loss) attributable to Dell Technologies Inc. $ 3,250 $ 4,616 $ 57,889 7,679 65,568 25,053 20,640 4,604 25,244 (191) (2,170) (2,361) (180) (2,181) 129 (2,310) $ 4.37 $ 6.38 Earnings (loss) per share attributable to Dell Technologies Inc. - basic: Dell Technologies Common Stock Class V Common Stock DHI Group $ f 6.01 (6.02) $ 4.22 $ 6.03 Earnings (loss) per share attributable to Dell Technologies Inc. - diluted: Dell Technologies Common Stock Class V Common Stock DHI Group $ H 5.91 (6.04) Fiscal Year Ended January 29, 2021 January 31, 2020 February 1, 2019 3,505 $ 5,529 $ (2,181) Net income (loss) 528 (226) (631) 2 43 45 Other comprehensive income (loss), net of tax Foreign currency translation adjustments Available-for-sale investments: Change in unrealized gains Reclassification adjustment for net losses realized in net loss Net change in market value of investments Cash flow hedges: Change in unrealized (losses) gains Reclassification adjustment for net gains included in net income (loss) Net change in cash flow hedges Pension and other postretirement plans: Recognition of actuarial net losses from pension and other postretirement plans Reclassification adjustments for net losses from pension and other postretirement plans Net change in actuarial net losses from pension and other postretirement plans (200) 100 (100) 269 (226) 43 299 (225) 74 (38) (60) (21) 5 1 (33) (59) (21) Total other comprehensive income (Loss), net of tax expense (benefit) of $(18), $(14), and $14, respectively Comprehensive income (loss), net of tax Less: Net income attributable to non-controlling interests Less: Other comprehensive income attributable to non-controlling interests Comprehensive income (loss) attributable to Dell Technologies Inc. 395 3,900 255 (242) 5,287 913 (533) (2,714) 129 6 $ 3,645 $ 4,374 $ (2,849) DELL TECHNOLOGIES INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) Fiscal Year Ended January 29, 2021 January 31, 2020 February 1, 2019 Cash flows from operating activities: Net income (loss) 3,505 $ 5,529 $ (2,181) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 5,390 6,143 7,746 Stock-based compensation expense 1,609 1,262 918 Deferred income taxes (399) (6,339) (1.331) Other, net (88) 938 756 Changes in assets and liabilities, net of effects from acquisitions and dispositions: Accounts receivable (396) (286) (1,104) Financing receivables (728) (1,329) (1,302) Inventories (243) 311 (1,445) Other assets and liabilities (1,656) (1,559) 564 Accounts payable 1,598 894 952 Deferred revenue 2,815 3,727 3,418 Change in cash from operating activities 11,407 9,291 6,991 Cash flows from investing activities: Purchases of investments (338) (181) (925 Maturities and sales of investments 169 497 6,612 Capital expenditures and capitalized software development costs (2,082) (2,576) (1,497) Acquisition of businesses and assets, net (424) (2,463) (971) Divestitures of businesses and assets, net 2,187 (3) 130 Other 28 40 40 Change in cash from investing activities (460) (4,686) 3,389 Cash flows from financing activities: Dividends paid to VMware, Inc.'s public stockholders (2,134) Proceeds from the issuance of common stock 452 658 805 Repurchases of parent common stock (241) (8) (14,075) Repurchases of subsidiary common stock (1,363) (3,547) (415) Proceeds from debt 16,391 20,481 13.045 Repayments of debt (20,919) (22,117) (11,451) Other (270) (71) (104) Change in cash from financing activities (5,950 (4,604) (14,329) Effect of exchange rate changes on cash, cash equivalents, and restricted cash 36 (90) (189 Change in cash, cash equivalents, and restricted cash 5,033 (89) (4,138 Cash, cash equivalents, and restricted cash at beginning of the period 10.151 10,240 14,378 Cash, cash equivalents, and restricted cash at end of the period 15,184 $ 10,151 $ 10,240 Income tax paid $ 1,421 $ 1,414 $ 747 Interest paid $ 2,279 $ 2,500 $ 2,347 $
