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Dell's Working Capital Harvard Business School Case #201-029 Case So t!

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Cop%right & 2010 'resident and (ello!s o Harvard College) *o part o this product +a% ,e reproduced- stored in a retrieva an% or+ or ,% an% +eans.electronic- +echanical- photocop%ing- recording or other!ise.!ithout the per+ission o Harvard

reproduced- stored in a retrieval s%ste+ or trans+itted in hout the per+ission o Harvard Business School)

Table A

Da%s Suppl% o 6nventor% 8DS69a 1993b // /2 42 52 1994b $$ 1/ 50 /4 1995b $2 /2 4$ 21

Dell Co+puter 0pple Co+puter Co+pa3 Co+puter 6B7

Source: Dell Co+puter Corporation (iscal 199$-199/ 0nnual ;eports< case !riter esti+ates ro+ 0pple Co+puter- Co+pa3 Co+puter- and 6B7 (iscal 1992-1992 0nnual ;eports)
a ,

DS6 = 8*et >nding 6nventor%9?8@uarterl% CABS?90 Da%s9

DellCs iscal calendar ends in Danuar%< 0ppleCs in Septe+,er< Co+pa3 and 6B7Cs in Dece+,er) Ehe DS6 or 199/ represents DellCs DS6 or the 3uarter ended on 1?29?9/- 0ppleCs on 9?$0?92- and Co+pa3Cs and 6B7Cs on 12?$1?92)

Exhibit 1

DellCs annual !orld!ide sales dollar gro!th versus industr%) Della 5$F 125F 2$F 21F /2F Industry -2F 4F 1/F $4F $1F

Calendar Year 1991 1992 199$ 1992 199/

Source: Dell Co+puter Corporation (iscal 1995 0nnual ;eport< case !riter esti+ates ro+ industr% +arket share data ro+ 6nternational Data Corporation)

DellCs iscal %ear closest in align+ent to calendar %ear stated)

Exhibit 2

Working Capital (inancial ;atios or Dell) DSIa 20 22 24 // // 21 $$ $$ $2 $/ $/ $2 $2 $5 $4 $1 DSOb /2 /1 /2 /2 /1 /$ /$ /0 /$ 29 /0 24 24 /0 29 22 DPO 25 // /1 /$ /5 2$ 2/ 22 2/ 22 25 22 22 2$ 2$ $$ CCCd 21 20 21 /5 /4 /1 21 21 20 20 $9 $/ $9 2$ 2$ 20

@19$ @29$ @$9$ @29$ @192 @292 @$92 @292 @19/ @29/ @$9/ @29/ @195 @295 @$95 @295

Source: Dell Co+puter Corporation iscal 199$-1995 annual and 3uarterl% reports)
a , c d

DS6 8Da%s Sales o 6nventor%9 = *et 6nventor% ? 8@uarterl% CABS?909) DSA 8Da%s Sales Autstanding9 = *et 0ccounts ;eceiva,les ? 8@uarterl% Sales?909) D'A 8Da%s 'a%a,les Autstanding9 = 0ccounts 'a%a,les ? 8@uarterl% CABS?909) CCC 8Cash Conversion C%cle9 = DS6 G DSA H D'A)

Exhibit 3

'ercent o Dell Co+puter S%ste+s Sales ,% 7icroprocessor) $Y94 4F 92F 1F $Y95 0F 41F 29F $Y9% 0F 2/F 4/F

C!"#uter Syste"s $15 +odels 215 +odels 'entiu+ +odels

Source: Dell Co+puter Corporation (iscal 1992-95 0nnual ;eports)

Exhibit 4

'ro it K #oss State+ents or Dell Co+puter Corporation 8+illions o dollars9) 199% I/-295 2-229 1-054 590 $44 5 111 242 1995 I$-24/ 2-4$4 4$1 219 229 8$59 52 129 1994 I2-14$ 2-220 2$$ 242 8$99 0 8$9 8$59 1993 I2-012 1-/5/ 229 $10 1$9 2 21 102 1992 I190 501 212 21/ 54 4 2$ /1

$is al Year Sales Cost o Sales Bross 7argin Aperating >Jpenses Aperating 6nco+e (inancing K Ather 6nco+e 6nco+e EaJes *et 'ro it

Source: Dell Co+puter Corporation (iscal 1995 0nnual ;eport)

Exhibit 5

Balance Sheets or Dell Co+puter Corporation 8+illions o dollars9) Year Ended &anuary 29( 1995 2$ 212 /$1 29$ 112 1-240 114 4 1(594

&anuary 2'( 199% Current 0ssets: Cash Short Eer+ 6nvest+ents 0ccounts ;eceiva,les- net 6nventories Ather Eotal Current 0ssets 'ropert%- 'lant K >3uip+ent- net Ather T!tal Assets Current #ia,ilities: 0ccounts 'a%a,le 0ccrued and Ather #ia,ilities Eotal Current #ia,ilities #ong Eer+ De,t Ather #ia,ilities T!tal *iabilities StockholdersC >3uit%: 're erred Stocka Co++on Stocka ;etained >arnings Ather T!tal St! ,h!lders- E.uity // /91 425 229 1/5 1-9/4 149 12 2(14'

&anuary 3)( 1994 $ $$2 211 220 10 1-021 14 / 1(14)

255 24$ 9$9 11$ 12$ 1(1+5 5 2$0 /40 8$$9 9+3 2-121

20$ $29 4/2 11$ 44 942 120 222 $11 8219 %52 1-/92

*0 *0 /$1 100 $1 %%9 *0 *0 *0 *0 4+1 1-120

Source: Dell Co+puter Corporation (iscal 1992-1995 0nnual ;eports)


a

1-190-000 shares o pre erred stock converted to co++on stock in iscal %ear 1995)