Dell's Electronics Financial Statements Business Analysis

The monetary ratios of any organisation are necessary in gauging the overall performance of an organization. Financial factors are commonly interrelated, and an have an effect on one thing usually has a rippling effect. For this reason, it is continually vital to operate a thorough monetary evaluation of any organization as this helps the administration in weighing its work, its profitability and even solvency. The cause of this paper is to analyze the elements of the economic statements belonging to Dell Technologies. The paper hence appears at the assets, profitability ratios and offers recommendations on what the business enterprise desires to do to enhance its performance.

Revenues and Sales

Between January 2012 and February 2013, Dell Technologies acquired revenues from the sale of the company’s products and services. The revenues obtained from these sales decreased by about 16%, even when there were other indicators of a healthy economy. Dell Technologies suffered from low revenues even with an effective business strategy. During the year 2009, there was a drop in revenues due to a recession. The percentage of revenues remained the same throughout the fiscal year and this indicates a healthy business strategy. In as much as the company experienced high revenues, the company suffered from the closure of a merger and this had a negative impact on stock prices.

Net Income Performance

The net income performance of Dell Technologies has been poor with a low of $2372 from $3492 from the previous year. This change is not minimal considering that it led to more than 1.2% decrease in the profit margin and over 2% fall on the returns on asset (ROA). Higher revenues and a good cost may not be sufficient to maintain a high profit margin (Sinha, 2010). A delay in the change of operations may have caused the lower profit margins and ROA. From the financial reports, there was a decrease in the net income and this is caused by the procurement of the Perot Systems. However, the company plans on expanding and this will help it improve its current financial statement.

Profitability Ratios

The three main profitability ratios have reduced significantly between the years 2012 and 2013. The profit margin was affected by the fall in revenues and it reduced by over 2%. At the same time, the low profit margins affected the return on assets leading to a significant decrease (Sinha, 2010). The same fate was dealt on the returns on equity because of the fall in the return on assets. The closure of some outlets also had an impact on the shareholder equity. This is a further explanation on why there was a decrease in the profitability ratios. However, the company intends on improving its operations and expanding. The expectation is an improvement in the profitability ratios.

Current Assets

The current assets of Dell Technologies also reduced significantly between the years 2012 and 2013. In the year 2012, the current assets of Dell Technologies totaled $13852. However, the current assets by February, 2013 totaled $12569. Such a reduction may be caused by lower revenues so that there was minimal amount of money available for investment activities. Even after the acquisition of Perot Systems, the company requires to have revenue for starting subsidiaries. The company did not have an excellent fiscal year and it did not generate profit. In as much as it managed to stay afloat, there is need for the development of better operational techniques. The company also requires to have more ways of generating revenues.

Reference

Sinha, G. (2010). Financial statement analysis. New Delhi: PHI Learning