Dell Computer Corporation

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Dell Computer Corporation

By | November 2010
Page 1 of 5
1.) Client business risk is the risk that a client’s business objectives will not be achieved and is determined by a combination of internal and external forces. In order to minimize this business risk, it is important for the client to accordingly align its business strategy (and implementation of the processes needed to execute those strategies) with the external business setting. After thorough evaluation of Dell’s performance last year, as reported by the SEC filing 10-K, and careful analyses of its industry and business environment, I have drawn conclusions on the risk of misstatement. Business strategy, internal business processes, and emerging business forces are some of the factors I used in my examination. I will outline my preliminary assessment of Dell, Inc.’s business risk in the paragraphs to follow.

2a.) Dell’s sales (all in millions) for the fiscal year ending 01/29/2010 were $52,902 as compared to sales of $61,101 (in millions) for the year end of 01/29/2009, showing a decline in revenue of $8,199. Net income for Fiscal 2010 also shows a loss from the prior year of $1,045- $2478 in Fiscal 2009 vs. $1433 net income in 2009 (all in millions). This is primarily due to the global economic downturn that began the second half of Fiscal 2010. Commercial spending, accounting for 77% of overall revenue for Fiscal 2010 was impacted by the weakened economy; furthermore, consumer profitability decreased due to a switch to lower-priced products and competitive pricing pressures. Cost reduction efforts and efficient capital management strategies are expected to show enhanced operating leverage and returned revenue growth in Fiscal 2011. Pertaining to balance sheet information, however, we see increases in cash flows from operating activities and total assets. Net cash provided by operating activities more than doubled in Fiscal 2010 from the previous year: $3,906 compared to $1894. This is an important factor when considering a company’s short-term...