Dell case 640 financial management

Dell’s Working Capital
We can see from the exhibit 4 that sales in 1996 was 52% higher than that in 1995. To support that growth, Dell needs to increase its operating assets.
Total Assets (% of sales)
45.87%
Loss:Short Term Investments (% of sales)
(13.93%)
Operating Assets (% of sales)
31.94%

The increase in Dell’s operating assets should be the change in 1996’s forecasting operating assets and operating assets in 1995. So operating assets should be increased by $5,296M*31.94% - $3,475M*31.94% = $582M.
Set the short term investments, long term debt, other liabilities, stockholders’ equity except for retained earnings equal to 1995, other operating related items also grow 52%, we can get the form below.

1995 Actual
1996 Forecast

Year Ended
Percent of

1995/1/29
1995 Salesb Current Assets:

Cash 43
1.2%
66 Short Term Investments 484
13.9%
484 Accounts Receivables, net 538
15.5%
820 Inventories 293
8.4%
447 Other 112
3.2%
171 Total Current Assets 1,470
42.3%
1,988 Property, Plant & Equipment, net 117
3.4%
178 Other 7
0.2%
11 Total Assets 1,594
45.9%
2,177

Current Liabilities:

Accounts Payable 403
11.6%
614 Accrued and Other Liabilities 349
10.0%
532 Total Current Liabilities 752
21.6%
1,146 Long Term Debt 113
3.3%
113 Other Liabilities 77
2.2%
77 Total Liabilities 942
27.1%
1,336
Stockholders' Equity:

Preferred Stocka 120
3.5%
120 Common Stocka