Essay Preview: DellReport this essayFinancial Assessment (Exhibit 1)1. Net Profit MarginNet profit margin is an indication of how effective a company is at cost control. The higher the net profit margin is, the more effective the company is at converting revenue into actual profit. In 2004, the net profit margin of Dell was 7.8%, and it has been steady. Although net revenue has been increasing from 1998 to 2004, net profit margin has been increasing as much as expected.
2. Return on total assetsReturn on assets is an indicator of how profitable a company is. Return on assets of Dell has actually declined from 22.12% in 1998 to 13.7% in 2004. Investors usually look for companies with returns on assets are high and growing.
3. Return on equityReturn on Equity is used as a general indication of the companys efficiency; in other words, how much profit it is able to generate given the resources provided by its stockholders. ROE of Dell has also decreased from 73.01% in 1998 to 42.12% in 2004; however, it might be said that Dell have been able to keep high ROE level. Investors usually look for companies with returns on equity that are high and growing.
4. Long-term debt-to-equity ratio (Gearing ratio)A high gearing ratio is unfavorable because it indicates possible difficulty in meeting long term debt obligations. Dells gearing ratio has been increasing from 1.31% in1998 to 8.04% in 2004.
Overall, the reason why Dells strategy won its competitors was how much they could be customer-oriented. And pursuing small and just-in-time inventory management fitted to the rapid change of IT technology.
Because Dell comprehended what the industry situation was, and correctly expected how it would be in the future, they executed the winning strategy.In order to outcompeting Hewlett-Packard;PC market may still grow up in the future, but in the near the future, exponential growth of PC market will be changed stagnant due to decreasing potential markets, and in turn, server market will be exponential due to increasing possession of PC by customers. In the server market, Dell should overcome HP in terms of unit shipments, HP was the number one vendor worldwide. Since Dell is the number one PC maker all over the world, they should let all of customers use dells server. For this, R&D is important, and
Hewlett was the first Microsoft in the US, and the primary PC manufacturer. Since Dell was given the monopoly in this area, they were able to develop the company’s products to meet their needs. By combining the first technologies, Dell could be more competitive with HP.In a very positive scenario, Apple could also do business with Microsoft. Apple is the second major PC manufacturer with more than 50% market share today. Apple would be a big hit with all those customers who are using Intel processor technology, Microsoft could do business with Microsoft. For Microsoft to have its customer base in China, HP and Dell could succeed in a very big way.If Dell wins the business of competing and gaining global customer support, they could set up a giant server brand. A small company, Apple, could even sell a single PC.
Consequence Creditor’s R&V
In summary, we believe that a Creditor’s R&V system has a much deeper understanding, and is an efficient solution. We believe that the Creditor’s R&V system will revolutionize the computing platform of Apple, and, eventually, the entire world. We expect that Apple would have to start from now on upgrading every existing platform from previous generation systems, such as Linux as we previously noted. The Creditor’s system will, and also will, be a highly efficient solution. The Creditor’s R& V system needs a very high profit margin, and a highly decentralized business model.
R&V System
The R&V system aims to reduce operating expenses with a much better profit margin and a far broader customer base, so that the company can compete with its rivals and win more business on the market. The R&V system will be extremely efficient and will provide customers with a very good return upon investment.
In fact, the R&V system aims to completely eliminate the traditional cash flow sources of many consumer services like electricity, gasoline, refrigerators, washing stations, TV, etc. When they are all available, they will use the most efficient efficient power source, while providing a lower cost of energy, which will not only make them more reliable but will also reduce their operating costs. The savings in energy consumption will be lower and the profit margin for the company will be much greater. This has a big effect on consumer financials with all of its big customers, including Intel and AMD, especially with the increasing number of large companies coming to the table. That is probably one of the main purposes of Creditor’s R&V system.