2-3 Accounting and Financial Statements

The results for dell in the year january 1995 january

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Unformatted text preview: uary 1996 have been exceptional, with sales growth of 52% as compared with overall industry growth of 30% of sales. Michael Dell, founder of the company, expects this level of growth to continue. You are charged with finding out whether it would be financially possible to grow the company by yet a third (increase sales in 50% to $7,944 in the year January 1996 – January 1997), while: •Paying back Long Term Debt •Repurchasing all stock; and •Maintaining a quick ratio of at least one. Please find out whether this is possible or not, and why. NOTE: Projecting financial statements requires judgment. It is likely that many items, like sales, will increase by a factor of 1.5 from their current value. On the other hand, there are other items that do not have to be affected by sales growth and could stay at their present value. Finally, there are items that seem to be affected by specific conditions in the industry. Part of the assignment is to decide which items in both the income statement and the balance sheet of Dell: •Should be multiplied by 1.5 in order to reflect accurately an i...
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This document was uploaded on 03/18/2014 for the course AEM 1200 at Cornell.

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