Submitted by: Submitted to: Shivam Tiwari Yogesh Maheshwari PGP I, Section: E Finance-I (Oct-Dec 2013) B ie!

"a#e $na%y#i# 1 &o'embe 2(, 2013

Dr.

Dells Working Capital

The Case: )*e ca#e dea%# +it* De%% "om,ute "o ,o ation-# . o+t* #t ate.y and t*e ob/ecti'e i# to unde #tand t*e #ou ce# t*at +ou%d !und t*e !utu e . o+t* o! t*e com,any0 The Company: De%% "om,ute "o ,o ation +a# !ounded in 1123 by 4ic*ae% De%%0 In t*e initia% day#, t*e com,any ,u c*a#ed com,ute # ! om IB4, u,. aded t*em, and t*en #o%d di ect%y to bu#ine## by mai% o de #0 5ate , De%% be.an to ma 6et and #e%% it# o+n b and ,e #ona% com,ute #0 Se%%in. di ect%y to cu#tome # +a# De%%-# co e #t ate.y0 It made com,ute # on%y a!te it ecei'ed t*e o de # and t*i# yie%ded %o+ 7IP and !ini#*ed .ood# in'ento y ba%ance#0 In 1110, to ca,tu e mo e ma 6et #*a e De%% b o6e ! om it# di ect-on%y bu#ine## mode% and #ta ted #e%%in. P"# t* ou.* indi ect c*anne%# a# +e%%0 8o+e'e , t*ey #u!!e ed a %o## o! 9:( mi%%ion in #econd ;ua te o! 11130 5ate , in 1113 De%% #*i!ted it# !ocu# ! om . o+t* to %i;uidity, , o!itabi%ity and . o+t*0 In 111(, #a%e# !o De%% +e e u, by <2=0 The Issue(s : )*e i##ue# t*at !ace De%% a e Findin. #ou ce# to !und it# !utu e . o+t* ,%an#0 >educin. de,endence on 'endo # to a'oid com,onent #*o ta.e# a# in 111(0 Out,acin. t*e indu#t y . o+t* ate $'oidin. #*o ta.e o! ca#* and ca#* e;ui'a%ent# The !nalysis: 7*en +e com,a e De%%-# ,e !o mance in 111( a# com,a ed to 111<, t*e Sa%e . e+ ! om 933:< to 9<21( e,o tin. a . o+t* o! <203=0 8o+e'e , t*e tota% a##et# in 111< +e e 91<13 i0e0 3(= o! #a%e# and o,e atin. a##et# +e e tota% a##et %e## #*o t-te m in'e#tment i0e0 91110 +*ic* i# about 32= o! #a%e#0 )*u# +*en t*e #a%e# . o+ by <2=, t*e o,e atin. a##et# need to . o+ in a #imi%a , o,o tion0 )*u#, t*e o,e atin. a##et# in 111( mu#t be O,e atin. $##et In yea 111( ? 9<21(mn @ 32= ? 91(13mn )*u#, De%% need# to inc ea#e it# o,e atin. a##et# by 9<23 mi%%ion to !und it# 111( . o+t* in #a%e#0 Sou ce# o! !und#Inc ea#e in %iabi%ity? 9 2132-9 1<13 ? 9 <<3 mi%%ion Inc ea#e in $ccount# ,ayab%e? 93((-9303 mi%%ion? 9 (3 mi%%ion 8ence tota% inc ea#e in #ou ce o! !und ! om %iabi%itie# ? 9(00-9(3 mi%%ion? 9311 mi%%ion Inc ea#e in #ou ce o! !und ! om P o!it ? 3021=@10<2@33:<? 922: mi%%ion0

)ota% #ou ce o! !und? 311A22: mi%%ion? 9 :12 mi%%ion0 )*u#, De%% can !und it# 111( . o+t* inte na%%y0