Analysis of liquidity and profitability measures of Dell Inc. The following data (amounts in millions) are taken from the February 3, 2012, and January 28, 2011, comparative financial statements of Dell Inc., a direct marketer and distributor of personal computers (PCs) and PC-related products:
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DELL INC.
Consolidated Statements of Income
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February 3, 2012
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January 28, 2011
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Net revenue
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$62,071
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$61,494
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Cost of net revenue
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48,260
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50,098
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Gross margin
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13,811
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11,396
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Operating expenses:
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Selling, general, and administrative
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8,524
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7,302
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Research, development, and engineering
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856
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661
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Total operating expenses
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9,380
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7,963
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Operating income
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4,431
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3,433
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Interest and other, net
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(191)
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(83)
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Income before income taxes
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4,240
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3,350
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Income tax provision
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748
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715
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Net income
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$3,492
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$2,635
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DELL INC.
Consolidated Statements of Financial Position
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February 3, 2012
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January 28, 2011
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Assets
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Current assets:
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Cash and cash equivalents
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$13,852
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$13,913
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Short-term investments
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966
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452
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Accounts receivable, net
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6,476
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6,493
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Short-term ?nancing receivables, net
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3,327
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3,643
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Inventories, net
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1,404
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1,301
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Other current assets
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3,423
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3,219
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Total current assets
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29,448
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29,021
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Property, plant, and equipment, net
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2,124
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1,953
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Long-term investments
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3,404
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704
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Long-term ?nancing receivables, net
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1,372
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799
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Goodwill
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5,838
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4,365
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Purchased intangible assets, net
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1,857
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1,495
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Other noncurrent assets
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490
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262
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Total assets
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$44,533
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$38,599
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Liabilities and Stockholders' Equit.
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y
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Current liabilities:
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Short-term debt
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$ 2,867
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$ 851
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Accounts payable
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11,656
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11,293
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Accrued and other
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3,934
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4,181
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Short-term deferred services revenue
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3,544
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3,158
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Total current liabilities
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22,001
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19,483
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Long-term debt
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6,387
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5,146
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Long-term deferred services revenue
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3,836
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3,518
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Other noncurrent liabilities
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3,392
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2,686
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Total liabilities
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35,616
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30,833
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Stockholders' equity:
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Common stock and capital in excess of $.01 par value; shares authorized: 7,000; shares issued: 3,369 respectively; shares outstanding: 1,761 and 1,918, respectively
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12,187
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11,797
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Treasury stock, at cost; 1,154 and 976 shares, respectively
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(31,445)
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(28,704)
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Retained earnings
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28,236
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24,744
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Accumulated other comprehensive loss
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(61)
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(71)
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Total stockholders' equity
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8,917
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7,766
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Total liabilities and equity
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$44,533
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$38,599
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At January 30, 2010, total assets were $33,652 and total stockholders' equity was $5,641.
a. Calculate Dell, Inc.'s, working capital, current ratio, and acid-test ratio at February 3, 2012, and January 28, 2011. Round your ratio answers to two deci- mal places.
b. Calculate Dell's ROE for the years ended February 3, 2012, and January 28, 2011. Round your ratio answers to two decimal places, and your percentage answers to one decimal place.
c. Calculate Dell's ROI, showing margin and turnover, for the years ended February 3, 2012, and January 28, 2011. Round your ratio answers to two deci- mal places and your percentage answers to one decimal place.
d. Evaluate the company's overall liquidity and profitability.
e. Dell, Inc., did not declare or pay any dividends during the years ended February 3, 2012, or January 28, 2011. What do you suppose is the primary reason for this?