Incremental Sales in 1996 Addnl. Operating Assets (32%) (Total Assets - ST Invest.

)

In USD M 1,821 582

5296 52% 4.29% 227

Forecasted 1996 Balance Sheet (In USD M) 1995 Actual Y.E. Jan 29, 1995 % 0f 1995 Sales Current Assets: Cash ST Investments A/R, net Inventories Other Total Current Assets P, P & E, net Other Total Assets Addnl. Funding Needed Current Liabilities: A/P Accrued & Other Liabilities Total Current Liabilities Long Term Debt Other Liabilities Total Liabilities Stockholders' Equity: Preferred Stock Common Stock Retained Earnings Other Total Stockholders' Equity 43 484 538 293 112 1,470 117 7 1,594 1.24% 13.93% 15.48% 8.43% 3.22% 42.30% 3.37% 0.20% 45.87% 31.94%

403 349 752 113 77 942

11.60% 10.04% 21.64% 3.25% 2.22% 27.11%

120 242 311 -21 652 1,594

18.76% 45.87%

As of 1995, Dell would be projected to be able to grow at 52% without increasing its leverage and Actual 1996 Balance Sheet Compared to Projections Y.E. Jan 28, 1996 Current Assets: Cash ST Investments A/R, net Inventories Other Total Current Assets P, P & E, net Other 29% Total Assets

Forecast for 1996 Fixed Liabilities 66 484 820 447 171 1,987 178 11 2,176

55 591 726 429 156 1,957 179 12 2,148

as compare 924 49 additional equity issued .10% 45 227 Dell internally funded a 52% growth in sales largely by increasing its asset efficiency and profitab of Sales in 1996.175 403 349 752 113 77 942 Stockholders' Equity: Preferred Stock 6 Common Stock 430 Retained Earnings 570 Other -33 49 Total Stockholders' Equity 973 879 Common stock to employees 2.176 5.148 2.Addnl. Funding Needed Current Liabilities: A/P Accrued & Other Liabilities Total Current Liabilities Long Term Debt Other Liabilities Total Liabilities 354 466 473 939 113 123 1.

957 179 12 2.176 Forecast for 1996 with Actual 1996 Sales Fixed Liabilities 66 484 820 447 171 1.E.987 178 11 2. 1996 Proportional Liabilities -11 107 -94 -18 -15 (30) 1 1 (28) 55 542 726 429 156 1.29% 227 227 2. Jan 28.148 . Variance Y.692 582 403 349 752 113 77 942 879 2.Growth in 1996 sales Actual net profit margin in 1995 4.176 354 1.176 ithout increasing its leverage and issuing further equity shares.

1% vs. as compared to projected 32% 5.3% . 4. Total Operating assets at 29% of Sales in 1996.63 124 187 46 233 466 473 939 113 123 1175 94 (28) 6 430 570 -33 973 2148 ng its asset efficiency and profitability.

Liabilities 66 484 820 447 171 1.176 Forecast for 1996 Variance Proportional Liabilities 66 484 820 447 171 1.987 178 11 2.376 211 - 879 2.1995 Actual Net Profit Margin Projected Net Profit for 1996 tual 1996 Sales Prop.176 -11 58 -94 -18 -15 -30 1 1 -28 -135 107 135 582 447 58 Extra Actual Funding in 1996 .146 113 117 1.987 178 11 2.176 (80) 582 (80) 614 532 1.

7% 46 614 532 1146 113 117 1376 -148 -59 -207 0 6 -201 63 124 505 Total Increase in Funding in 1996 879 2.176 94 (28) 973 45 272 Increase in Equity w/o 49 -22 5.15% GP Margin 1996 21. actuals -67 17.14% NP Margin 1996 20.(80) forecast vs.24% GP Margin 1995 .

Extra Actual Funding in 1996 .

Total Increase in Funding in 1996 over 1995 n Equity w/o 49 .

net Other Total Assets Addnl.148 44 days of sales 56 days of COGS To fund the shortfall of 984 M through increased asset efficiency.175 6 430 570 -33 973 2. Sales Addnl. Dell needs Current CCC (Cach to Cash Cycle) 40 days CCC has to become negative to fund the shortfall of 984 M HOW? Savings from Hypothetical WC improvements DSI Q4 1996 Actual Hypothetical improvements 1997 Projected Hypothetical improvements * Daily Savings 31 -17 14 17 17. Funding Needed Current Liabilities: A/P Accrued & Other Liabilities Total Current Liabilities Long Term Debt Other Liabilities Total Liabilities Stockholders' Equity: Preferred Stock Common Stock Retained Earnings Other Total Stockholders' Equity 55 591 726 429 156 1. Operating assets Actual 1996 Sales Gross Margin Forecasted 1997 Balance Sheet (In USD M) 1996 Actual Y.E. net Inventories Other Total Current Assets P. Jan 28.Addnl.148 466 473 939 113 123 1.6 . 1996 Current Assets: Cash ST Investments A/R. P & E.957 179 12 2.

Repurchase of Stock indicates under valuation in the market and leads to increase in value.Annual Savings Total Savings in USD M 299.A combination of both seems to be the only reasonable alternative to fund the shortfall. Actual profit margin 1997 Actual 1997 CCC 13 .1% increase in margin will inc Margin improvements reduce the required working capital improvements as above .55 983 Improvement in Profitability in 1997 can also eliminate the shortfall of 984 M .

4% 0.640 269 18 2.601 1.927 (161) 83 591 1.2% 14% 8% 3% 37.2.601 Projected Gross Profit 22.706 466 473 939 123 1.927 881 2.296 20.1% 7.927 371 83 591 1.6 CCC 40 -52 -12 .944 1.409 113 185 1.089 644 234 2.648 779 5.40% 408 Projected 1997 Net Profit 5.6 56 Forecast for 1997 with a 50% Sales Increase Debt repaid & $500 Equity Fixed Liabilities Prop.0% 3.089 644 234 2.062 18% 41% 1.381 2.927 984 779 9% 9% 18% 2% 2% 22% 466 473 939 113 123 1.944 Projected 1997 Sales 7.927 1.1 DPO 33 20 53 20 17.175 699 710 1.1 45 Daily COGS 17.15% 1996 Actual % 0f 1996 Sales 1% 11.2% 41% 29.640 269 18 2.927 DSO 42 -15 27 15 22. Liabilities Buyback 83 591 1.089 644 234 2.381 2.640 269 18 2.

518 M ST Inv. Increased to 1237 M from 591 M LT debt reduced to 18 M from 113 M Common stock reduced from 430 M to 195 M Inventories 251 M 903 M A/C Rec. 6.A combination of both profitability & WC improvements leads to increase in value.. ements as above .1% increase in margin will increase net income by 79 M.00 904 352.42 ll of 984 M .331. 1040 M A/c payable 37 54 (4) .68% 7759 M sales.

Sign up to vote on this title
UsefulNot useful