Question

Go to the SEC Web site. Under ‘‘Filings & Forms (EDGAR),’’ click on ‘‘Search for Company Filings.’’ Click on ‘‘Company or Fund, etc.’’ Under Company Name, enter ‘‘Dell Inc’’ (or under Ticker Symbol, enter ‘‘DELL’’). Select the 10-K filed March 26, 2009.

1.Copy the first two sentences in the ‘‘Item 1. Business’’ section.

2:  Speculate why inventories are relatively low in relation to accounts receivable, net.

3:  Speculate why accounts receivable, net is relatively low in relation to accounts payable

4:  Speculate why the amounts in cash and cash equivalents and short-term investments are large in relation to total current assets.

Answer 1

1. As required to copy from the SEC website "Dell listens to customers and delivers innovative technology and services they trust and value.

2. The basic reason for inventory to be low is the movement of closing stock to finished goods is either very slow which cannot be the case (possible only when the business is about to close) or the inventory is fast moving and the stock is maintained at a consistent level by not storing the goods for long period.If the stock is low in relation to accounts receivable it means that the inventory is sold at faster rate to the purchasers (debtors).

3. Accounts receivable is lower than accounts payable can be due to the fact that the credit period given to the debtors is lesser than those received by the accounts payable.Moreover the goods sold are majorly for cash.

4. Since the goods sold may be majorly for cash hence the liquid asset may be maintained at higher levels in form of Short term investments as compared to the total current assets. This can be known from the fact that accounts receivable are less.

Conclusion: The cash cycle of the company is very quick i.e. the inventory gets converted into cash very quickly and the same is mostly invested in short term investments to make additional gains within a short period.