PERFORMANCE EVALUATION THROUGH PROFITABILITY AND CREDIT ANALYSIS OF DELL INCORPORATION

Abstract

From a managerial perspective, it is pivotal to properly understand and master business analysis. An integral and essential subsection is financial statement analysis which incorporates the analysis of a firm’s strategy, financial position, performance and business environment. The ability to individualize certain patterns, through financial analytical tools, allows the management to improve the decision-making process and reduce the degree of uncertainty. The set of financial statements is utilized to assess the firm’s overall performance by constructing trend patterns, carry out comparative analysis and computing and comparing specific metrics. The purpose of the analysis varies depending on the users’ perspective but the common elements are related to a firm’s operating performance evaluated through liquidity, capital structure, solvency and profitability analysis.

Dell’s comprehensive case analysis describes and illustrates how financial analytical techniques are applied in the evaluation process and how important it is to accurately understand the differences and implications between the standard GAAP statements and the reformulated versions. Traditional measurement tools combine operating and financial elements and fail to distinguish different sources of profitability. Reformulated statements thoroughly explain the firm’s operating, financing and investing strategy and allow to align financial statements with the firm’s operating activities.