Dell working capital

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Dell working capital

To continue using Dell.com, please upgrade your browser. Share Cash is the lifeline of a company. If this lifeline deteriorates, so does the company's ability to fund operations, reinvest and meet capital requirements and payments.

The goal of working capital management is to ensure that the firm is able to continue its operations and that it has sufficient cash flow to satisfy both maturing short-term debt and upcoming operational expenses. A managerial accounting strategy focusing on maintaining efficient levels of both components of working capital, current assets, and current liabilities, in respect to each other.

Working capital management ensures a company has sufficient cash flow in order to meet its short-term debt obligations and operating expenses.

Decision criteria[ edit ] By definition, working capital management entails short-term decisions—generally, relating to the next one-year period—which are "reversible". These decisions are therefore not taken on the same basis as capital-investment decisions NPV or related, as above ; rather, they will be based on cash flows, or profitability, or both.

One measure of cash flow is provided by the cash conversion cycle —the net number of days from the outlay of cash for raw material to receiving payment from the customer. As a management tool, this metric makes explicit the inter-relatedness of decisions relating to inventories, accounts receivable and payable, and cash.

In this context, the most useful measure of profitability is return on capital ROC. Firm value is enhanced when, and if, the return on capital, which results from working-capital management, exceeds the cost of capitalwhich results from capital investment decisions as above. ROC measures are therefore useful as a management tool, in that they link short-term policy with long-term decision making.

See economic value added EVA.

Dell working capital

Credit policy of the firm: Another factor affecting working capital management is credit policy of the firm. It includes buying of raw material and selling of finished goods either in cash or on credit. This affects the cash conversion cycle.

Management of working capital[ edit ] Guided by the above criteria, management will use a combination of policies and techniques for the management of working capital.

Dell working capital

The policies aim at managing the current assets generally cash and cash equivalentsinventories and debtors and the short-term financing, such that cash flows and returns are acceptable. Identify the cash balance which allows for the business to meet day to day expenses, but reduces cash holding costs.

Identify the level of inventory which allows for uninterrupted production but reduces the investment in raw materials—and minimizes reordering costs—and hence increases cash flow.

Identify the appropriate credit policyi. Identify the appropriate source of financing, given the cash conversion cycle:Apr 07,  · Dell was also generating cash by maintaining low cash conversion cycle.

More sales could be stimulated on credit basis Dell had a low inventory with low fixed assets which help it to achieve high return on capital employed. Dell's Working Capital 2. How did Dell fund its 52% growth in ? Total Liabilities - 1, Mil - Mil Stockholders Equity: Free Essay: 3/27/13 Dell Working Capital 1.

How was Dell’s working capital policy a competitive advantage? Dell’s core strategy in the 90’s, build to order. Dell is an American multinational computer technology company based in Round Rock, Texas, United States, that develops, sells, repairs, and supports computers and related products and rutadeltambor.com after its founder, Michael Dell, the company is one of the largest technological corporations in the world, employing more than , people in the U.S.

and around the world. Please note that the Dell Technologies World My Agenda Scheduler is not a reservation system and is provided only as a planning tool for conference attendees. View Essay - Dell Working Capital Final - Group 5 from FINANCE , at Harvard University.

Dells Working Capital Group 5 Summer Danzeisen Wael Kamal Khalil Benlemlih Robert Torino 1 -.

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