Monday, February 20, 2006

A casual look at DELL's balance sheet

Every month, we look at our money in the bank and then look at the bills. Let's do this for DELL.

Cash + cash equiv: $7.042 billion
Short term investment: $2.016b
Other (who knows what?): $2.62b
Investment: $2.69 b

Total money in the bank: 14.368

Bills to pay: $15.927 b
Debt: 0.5 b
Other debt: 2.549 b

Total: 18.976

DELL is $4.6 billion short of paying its bills and debt, even if you add the $4.089 billion DELL can collect from its customers, it's still $500 million short.


Blogger Eddie said...

Some details about the numbers:

Cash + C. Eq. 7.04 (not 7.02)
S. T. invest. 2.02 (not 2.06)

Anyway, your opinion holds. What you are doing is to demonstrate that Dell is not much more than a company with a screwdriver and a stamp sign: Current Assets are 77% of total assets

What I fail to follow, and beg for your further clarification is what is the significance of having a total of liabilities larger than current assets.

If I am AMD and issue a bond to build a Fab, I gain a large new long term asset and long term debt; furthermore, I may not have at all "money in the bank" to pay all of that bond and still it could make sense to do the investment...

12:03 AM, February 21, 2006  
Blogger Sharikou, Ph. D said...

I corrected the numbers.

I was not looking at the current assets, I was looking at the total of DELL's liquid assets and see if DELL can meet its debt with its money in the bank. If DELL has to liquidate its property to meet its obligations, it's already in big trouble.

AMD's financial situation is different, AMD's debt was long term, some more than 20 years, DELL's liabilities are mostly current.

Furthermore, AMD has reduced its long term debt to 0.6 billion and it has cash of $2 billion.

11:25 AM, February 21, 2006  
Blogger Sharikou, Ph. D said...

I checked ENRON's restated balance sheet, after sdjusting for the debt(about $1 billion ) hidden in the SPEs, ENRON still had $9 billion stock holder equity at the very end, 2X of DELL.

11:53 PM, February 21, 2006  

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