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Essay / Research Paper Abstract
This 3 page paper examines the performance of Dell Inc., the well known computer company, using the rerun on equity and the return on assets, showing the calculation for 2001 – 2005 and comparing this to the industry averages. The bibliography cites 4 sources.
Page Count:
3 pages (~225 words per page)
File: TS14_TEdellroe.rtf
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Unformatted sample text from the term paper:
can look at two main measures that indicate efficiency; the return on equity and the return on assets. Over a period of time patterns may emerge, these do not guarantee
the future but do give an indication of the management effectiveness. When calculating these there may be some differences between the way the calculation of different organisations with the way
they calculate the net profit and the assets or equity. The return on equity is a ratio that shows the net profit as a percentage of the shareholders
funds. The calculation for this is the net profit before interest and tax divided by the shareholders funds (also known as the equity). This is often a ratio that is
of great importance to shareholders. Return on equity 2001 2002 2003 2004 2005 Net profit (a) 2,177 1,246 2,122 2,645 3,043 Equity (b) 5,622 4,964 4,873 6,280 6,485 Return on
equity (a/b) 38.72% 25.10% 43.55% 42.12% 46.92% Here we can see that there is there is a dip in 2002 which was also a very bad year in terms of
net profit, but apart form this one year there is a general trend towards an increase in the level of the return on equity. The equity has increased and as
such we can see the main reason for the increase in the increase in the net profit. If we compare this to the industry as a whole the current average
is 27.5% and for the S&P 500 it is 14.6%. Therefore, Dell is currently outperforming the industry. If we look at the average for these over the last five years
the same pattern is seen with an industry average of 17% for the industry, with Dell being more than double that, and only 11.9% for the S&P 500 (MSN
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