Dell Cash Flow Analysis

Topics: Cash flow, Finance, Cash flow statement Pages: 2 (431 words) Published: October 25, 2011
Dell Cash flow analysis

Cash flow statement show how money is moving into company and out of it. In addition to this, if we want to determine Dell company solvency, we have to take a look in cash inflows and outflows. So in order to analise Dell, I have done calcualtions of these ratios:

Cash Ratio=(Cash&Equivalents+ Short term investment)/Current Liabilities| 2007| 10298/17791= 0,579|
2008| 7972/18529 = 0,43|
2009| 9092/14859 = 0,612|
2010| 11008/18960 = 0,58|
1.Liquidity ratio


Cash ratio helps to determine how quickly Dell can pay back its short term debts. From data given above, it is observable that in 2009 Dell has the best liquidity position over past four year, but in 2010 its liabilities increased and ability to repay debts decreased. Cash Flow to Debt=Operating Cash Flow/Total Liabilities|

2007| 3969/21196= 0,187|
2008| 3949/23732 = 0,166|
2009| 1894/22229 = 0,085|
2010| 3906/28011 = 0,139|
2. Debt Utilization ratio

Cash Flow to Debt ratio helps to evaluate Dell ability to liquidate its total debts. From data given above, it is noticeable that total liabilities were increasing year by year while operating cash flow decreased from year 2007 to 2010. This leads to the fact that Dell may not be able to cover its debts. There are three parts in cash flow statement, so potential investors before deciding invest or not to company always carefully take a look in each of these parts. 1. Cash flow from operating activities. In 2009 this equivalent has significantly decreased to $1894. This was caused by decreasing in working capital. Even though in 2010 it has increased to $3906, but in comparison to year 2007 it also remain decreasing. This gives not very good sense for investors who are expecting...
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