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Government Accountancy

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Submitted By kdaga
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The ratio analysis of Dell’s and its industry last year financial data is as under:

|Ratios |Dell |Industry |
|Profit as percent of sales |4.2% |10.39% |
|Current ratio |1.19 |1.67 |
|Debt to equity ratio |67.49 |48.51 |
|ROE 5 yr average |35.74% |24.46% |

The computer hardware industry attracts its potential customers by offering greatest, fastest and latest products, Dell need an increase in their engineering, research and development to sale percentage. Dell should focus on the areas where they have expertise and not put their hands on everything. They could rethink of pushing into the expanded exposure into retail stores.

Dells liquidity and return on investment ratios are quite strong. If they are able to increase their profit margins within their operating performance, it will provide higher net income which in turn would enhance the asset utilization. The current ratio compares firm’s liquid assets with its short term liabilities. Dell’s current ratio is lower than the industry. Dell Inc. had $1.19 in current asset for every$1 it owed in current liability. As compared to the industry Dell has low current assets to cover its current liabilities this make Dell a less safe company as compared to the industry.

The debt to equity ratio of Dell is quite high as compared to industry this shows that Dell has more debt

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