Financial Management Principles (Dell inc.) - Essay Example

Think about this for a second, do you want to be an active part of the company that pioneers the industry of the future Do you want to become a key member of one of the most resilient, most dynamic and most aggressive computer manufacturing companies in the world Imagine being an investor of the world's leading computer manufacturer. This is what Dell, Inc. can give you as an investor. Let me show you why. As a computer manufacturing company that has 18% - 19% of the global personal computer market, in comparison to Hewlett-Packard's 15%, Dell, according to Wikipedia, "manufactures more computers than any other organization in the world (Dell, 2006).

" As a company that employs more than 63,700 people worldwide, it had reached the top spot on Fortune magazine's America's Most Admired Companies in February 2005. Why had Dell made it to the top spot According to writer Abrhm Lustgarten "Dell's peers see it as brilliantly managed brand - but no innovator in raw computing" (Dell Tops Fortune's List, 2005). Though Dell slightly fell down to the 8th position in the 2006 Fortune magazine's America's Most Admired Companies List (Fortune America's Most Admired Companies 2006), still it leads the computer manufacturers in this prestigious list.

Thanks to the exemplary entrepreneurial and leadership trait of Michael Dell, Dell, Inc. has maintained its position as the industry leader in computer manufacturing. In terms of its financial status, as illustrated on Table 1 below, Dell is in good shape. In terms of profitability, the industry leader performs extremely well. Having a return on equity (ROE) of 86.5%, Dell enables its investors to yield $.856 in every dollar they invested on its stocks within a year. Together with 15.5% return on asset (ROA) and gross margin that accounts for 18.

2% of the entire revenue, the figures under the Profitability Ratios section of the Financial Ratios of the company (Table 1), exhibits the company's efficient cost management. With a reported very high inventory turnover amounting to 88%, Dell is also recognized as one of the most efficient companies in the IT industry according to the table. This means that for every 100 units manufactured, the company was able to sell 88 of these to its consumers. Its figures in fixed assets turnover ratio also reveals its high utilization of fixed assets.

The financial structure ratio portion of the table shows the aggressiveness of the company to finance its operations with debt. Having a high Financial Leverage Ratio and Debt Ratio reflects the company's yearning to improve production even to the point of incurring debts in doing so. Its aggressiveness in procuring financing by debts is bolstered by its figures in its Short Term Solvency Ratios. This means that Dell has the capacity to cover its immediate liabilities with its current assets.

With what we saw in its historical account and financial performance, Dell, Inc. has the a very notable capacity to give you more than you money's worth, compared to other players in the IT industry that records flat or even declining sales in the past decades. Historical account backed up by sound data indicates truth beyond doubt. Dell, Inc. achieved this. All you need to do is to invest on us. Table 1. Financial Ratios of Dell, Inc. (Advance Financials, 2006) ReferencesAbout Dell (2004).

Retrieved August 4, 2006, from http://www1.us.dell.com/content/topics/global.aspx/corp/en/ homec=us&l=en&s=corp Dell (2006). Retrieved August 4, 2006, from http://www.advfn.com/p.phppid=financials&symbol=N^DELL&goUS=1 Dell (2006). Retrieved August 6, 2006 fromhttp://en.wikipedia.org/wiki/DellDell Tops FORTUNE's List of America's Most Admired Companies; Moves up from No. 5 Spot Last Year, Wal-Mart-No. 1 Last Year-Falls to No. 4 (2006). Retrieved August 6, 2006 fromhttp://www.findarticles.com/p/articles/mi_m0EIN/is_2005_Feb_22/ai_n9776909