Corporate Finance Assignment/ Professional Essay Writers

Dell Inc., headquartered in Austin, Texas, is the global leader in selling computer products and services.

The following is Dell’s (simplified) balance sheet from a recent year.
DELL INC.
Balance Sheet
at February 3, 2006
(dollars in millions)
Assets
Current assets
Cash ………………………………………..$ 7,042
Short-term investments ……………………. 2,016
Receivables and other assets ………………. 5,452
Inventories …………………………………. 576
Other ……………………………………….. 2,620
17,706
Noncurrent assets
Property, plant, and equipment …………….. 2,005
Long-term investments …………………….. 2,691
Other noncurrent assets …………………….. 707
Total assets ………………………………… $23,109
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable ……………………………$ 9,840
Other short-term obligations ………………… 6,087
15,927
Long-term liabilities ………………………… 3,053
Stockholders’ equity
Contributed capital …………………………… 284
Retained earnings …………………………….. 3,845
Total stockholders’ equity and liabilities …… $23,109

Assume that the following transactions (in millions of dollars) occurred during the remainder of 2006 (ending on January 28, 2007):

a. Issued additional shares of stock for $200 in cash.

b. Borrowed $30 from banks due in two years.

c. Purchased additional investments for $13,000 cash; one-fifth were long term and the rest were short term.

d. Purchased property, plant, and equipment; paid $875 in cash and $1,410 with additional long-term bank loans.

e. Lent $250 to affiliates, who signed a six-month note.

f. Sold short-term investments costing $10,000 for $10,000 cash.

g. Dell does not actually pay dividends; it reinvests its earnings into the company for growth purposes.
Assume instead of this problem that Dell declared and paid $52 in dividends during 2006.

Required:

1. Prepare journal entry for each transaction.

2. Create T-accounts for each balance sheet account and include the February 3, 2006, balances.
Post each journal entry to the appropriate T-accounts.

3. Prepare a balance sheet from the T-account ending balances for Dell on January 28, 2007, based on these transactions.

4. Compute Dell’s financial leverage ratio for 2006 (year ending on January 28, 2007). What does this suggest about the company?  Get FInance Help Today