FIN4060 Final Project
Week 5 Project
Previous
Next
Instructions
Course Project
Tasks:
Compile the information you have gathered on your companies in weeks 1-4 to answer the following questions.
- What is the relationship between your companies and their respective employees and investors? How do these relationships affect financial performance?
- Are there any issues outstanding for your companies? How do these issues affect the overall financial viability of your companies?
- Compare and contrast your two companies using the financial statements for the two firms and the accumulated data.
- Justify if you were going to make an investment in one of the two companies, which one would you select? Why?
- Prepare a comprehensive final report that summarizes your research and analysis of the two companies you selected for your Final Project over all weeks of this course.
Submission Details:
Name your file: SU_FIN4060_W5_CP_LastName_FirstInitial
final projecton time
Running head: Financial Analysis of Cisco & Dell
1
Financial Analysis of Cisco & Dell
3
Financial Statement Analysis
Sonya Hatfield
South University Online
FIN 4060
Professor Clark
February 29, 2020
Cisco Systems Inc. and Dell Technologies Inc.
Question One
Cisco Systems Company is one of the biggest American conglomerate tech company located in the San Jose as its headquarters in California. The company deals specifically in the development of the hardware, software and telecommunication equipment which are used by many companies in the world. Besides manufacturing the company also sells those networking products to some of the tech giants like Apple and even Microsoft. The company which was founded back in 1984 has many severally ranked in the fortune 500 companies by the Forbes ranking (Fraser, Ormiston & Fraser, 2010). In addition, the company reported a net revenue of U.S $51.9 billion dollars in the financial year ended 2019. According to the NYSE listing the company’s stocks are showing resilient to the market forces.
Dell technology Inc. is also an American multinational company which was formed as a result of the merger between the Dell and EMC Corporation. The company which deals in the manufacturing and assemblage of personal computers, smartphones, servers and even computer software. The company which is enlisted in the NYSE. Moreover, the company reported a revenue of close to U.S $90.63 billion dollars in the financial year ended 2019. According to the Forbes ranking in 2018, Dell Technology Inc. was rank 35th out of 2000 in the fortune 500 companies. From this ranking it could be evidently argued that the company was doing fairly well especially in the competitive tech industry that has some of the giant multinational conglomerates globally. In the same year Forbes ranking rank Cisco Systems Inc. 2nd out of 10 in the most valuable and rapidly growing brands in the global economy.
Question Two
Both companies have been very committed to the corporate governance as evident by some of their key commitment. For instance, both companies have singled out some key principles like transparency, responsibility and accountability in all the activities the companies does (King, Masumoto, Heller & Harp, 2011). Since through corporate governance is many companies have been able to continually grow in all spheres of growth, it follows that certain elements or key commitment must be at the center of management of any company.
Question three
Some of the competitors of Dell technology Inc. include companies like Apple Inc. and Microsoft all of which are giant companies with a wide market base globally. Also, the companies unlike Dell are using a different model of business like internet retail combined with brick and mortar. The similarities in all companies includes that they are all using customer driven business strategy to expand their customer base.
Reference
Daniel, M., Neves, R. F., & Horta, N. (2017). Company event popularity for financial markets using Twitter and sentiment analysis. Expert Systems with Applications, 71, 111-124.
Fraser, L. M., Ormiston, A., & Fraser, L. M. (2010). Understanding financial statements. Pearson.
King, N., Masumoto, W., Heller, P., & Harp, M. (2011). U.S. Patent No. 7,941,353. Washington, DC: U.S. Patent and Trademark Office.
Running head: WEEK 2 PROJECT
1
WEEK 2 PROJECT 5
Financial Statement Analysis
Sonya Hatfield
South University Online
FIN 4060
Professor Clark
Income statement is a key financial statement that reports on an organizational profitability during a short time for any time period. Investors needs to understand the income statement so as they can analyze the profitability and the future growth of any organization as this plays a bigger role in determining if investments would be made or not (Easton, 2018). The tree items from the income statement that are important to an investor includes;
Sales; the sales of a given organization can be a determinant as to whether an investor can be willing to invest in an organization or not. For instance, the sales are a representative of the total market share of an organization. Comparing the total sales of a company with the previous years, you can get a total representation of the company growth in total (Abernathy et al. 2017).
The second aspect is the gross profit margin. This is computed by getting a percentage of the difference between the sales and the operating expenses divided by the total sales. By computing and analyzing the gross profit margin, once is able to determine how the company is doing and the total revenue that it can generate from its operating activities (Lauren and Watta 2019, December).
The third aspect is the net profit margin. This can be computed by the getting a percentage after dividing the net profit by the total sales. Investors are keen in evaluating this aspect as it helps in determining the revenue that is generated from the capital that is being employed by the investor and the investors uses it in determining if they have attained the intended return.
Dell technologies
Cisco systems
Sales
23841
$51904
Gross profit margin
29.81%
$62.94%
Net profit margin
20.21%
28.30%
This shows that Cisco Systems has higher sales as compared to Dell technologies. Its gross profit margin is also higher net profit is higher. This shows that between this two companies, an investor would most likely choose Cisco Systems (Abernathy et al. 2017).
The balance sheet is another aspect that may be taken into consideration and some of the items that are very important and should be taken into consideration by an investor includes;
Cash- cash is the major aspect that can be taken into account as the organization which generates most cash means that they are certainly doing a better job in satisfying their customers and the y are getting paid. However, an organization that has too much cash can raise worried whereas also having too little cash can raise more red flags.
The other aspect that can be taken into consideration is the current liabilities as this are the obligations that are due in a year. Fundamental investors always choose the organizations that has fewer liabilities than their assets especially when this is compared against the cash flow. Investing in an organization that may be having more debts that what they have may bring about many suspicions and are certainly in trouble (Bogićević et al. 2016).
Equity is equal to the assets minus the liabilities as this is a representation of how much an organization have claims to. Investors need to pay more attention in valuing the retained earnings and paid in capital in this part. Paid in capital shows the initial investments amount which has been paid by the stockholders for their own advantages. Compare this to additional paid in capital to show the equity premium investment paid over par value. Retained earnings indicates the amount or profit that the firm invested or reinvested to pay down debts, rather than distributed to shareholders as dividends,
Dell technologies
Cisco Systems
Cash
9676
$11750
Current liabilities
$44972
$31712
equity
(942)
$33571
From the balance sheet, it’s clear that Cisco systems also has more cash.
In comparing both the companies, it’s clear that both the companies are close in terms of cash, but Cisco Systems has a higher current liabilities as compared to that of Dell technologies. Dell has less retained earnings as compared to Cisco systems meaning the Cisco systems has more funds to invest in further projects and research. Hence Cisco Systems is more favorable when comparing the financial analysis and the balance sheet as compared to that of Dell technologies (Lauren and Watta 2019, December).
References
Abernathy, J. L., Beyer, B., Gross, A. D., & Rapley, E. T. (2017). Income statement reporting discretion allowed by FIN 48: Interest and penalty expense classification. The Journal of the American Taxation Association, 39(1), 45-66.
Lauren, P., & Watta, P. (2019, December). A Conversational User Interface for Stock Analysis. In 2019 IEEE International Conference on Big Data (Big Data) (pp. 5298-5305). IEEE.
Bogićević, J., Domanović, V., & Krstić, B. (2016). The role of financial and non-financial performance indicators in enterprise sustainability evaluation. Ekonomika, 62(3), 1-13.
Easton, M., & Sommers, Z. (2018). Financial Statement Analysis & Valuation, 5e.
Running head: WEEK 3 PROJECT 1
WEEK 3 PROJECT 5
Statement of Cash Flows
Sonya Hatfield
South University Online
FIN 4060
Professor Clark
March 10, 2020
Statement of Cash Flows
Introduction
The week 3 project paper will analyze the statement of cash flows for the chosen two companies of which are CISCO and Dell Inc. the paper will also provide a summary of the course project of up to this point shining light on what I have learned about the two companies. The next task will be researching the companies investing as well as financing activities and then compare and contrast them regarding the types of goods and services they offer. Finally, the paper will evaluate both the investing as well as the financing strategies of both companies and define its effectiveness.
Course project summary
The course project involved the selection of two companies that are publicly traded and examine their financial statements, their characteristics of operations and obligations to corporate governance. Both the selected companies are tech giants in the United States offering a range of tech goods and services such as computers, software, hardware servers, smartphones among other products and services. Both companies are well committed to corporate governance and this is through the adoption of guidelines that are intended to promote a high level of performance as well as the provision of guidance of the affairs of the organizations. Also, the course project identified and analyzed the various financial statements including the income statements as well as the balance sheets. According to the financial statements analyzed for the year 2019, Dell Inc. appeared to have done better than CISCO with a revenue of $90.63 billion as compared to that of CISCO which was at $51.9 billion (DELL Technologies, 2020). The success of Dell Inc. was mostly attributed to better managerial operations as well as investments.
Investing Activities and Strategy
After researching the investing activities as well as strategies of both companies, it was clear that their investment activities were related to capital expenditures. Through capital expenditures, the companies were able to invest back in the businesses through the acquisitions of assets as well as maintaining assets. Some of the capital expenditures of each company were included in the balance sheet. In the first quarter of 2019, CISCO spent $189 million on capital expenditure while making several investments that raised over $150 million according to the CISCO 2019 annual report (CISCO, 2019). On the other hand, Dell Inc. had a capital expenditure of $ 537 million in the last quarter of the financial year 2019 (DELL Technologies, 2020). Dell also had several investments in 2019 raising a profit of over $ 200 million in the last financial year (DELL Technologies, 2020).
Both companies made several investments in terms of acquisitions and mergers in the previous financial years. All these investments made the companies a huge profit in each respective financial year as they both applied customer-driven strategies in expanding their customer base. The difference that exists between the two companies is the number of capital expenditures that the businesses are investing back in. CISCO is one of the fastest-growing tech companies globally, however, when compared to Dell which is already an established tech giant, it is not doing as better as Dell. Thus, the profits of Dell Inc. are much higher than those of CISCO both quarterly and annually. In my opinion, CISCO investment activities and strategies are not as profitable as those of Dell Inc.
Financing Activities and Strategies
The biggest financing activities and strategies of both companies involved the dividends mostly paid to the various stockholders as well as the net borrowings that the companies utilize to finance the business. Dell paid a total of $11 billion on dividends to its shareholders in the 2019 financial year with a net borrowing of $14.4 billion at the end of the third quarter of the 2019 financial year (DELL Technologies, 2020). On the other hand, the major financial activities for CISCO the payment of a debt of $6.98 billion to its shareholders (CISCO, 2019). The company also had a net borrowing of $5.5 billion at the end of the third quarter of the 2019 financial year (CISCO, 2019). Both companies were able to pay off their dividends and also debts through the various investments they had made and also offering quality goods and services to customers to stay at the top.
The companies shared investments as their major financial activities of 2019. The ratio of debt to equity for both companies was manageable leading to the businesses making profits at the end of the year. The differences in the financial activities and strategies for both companies are evident in their investments whereby Dell invested heavily when compared to CISCO (CISCO, 2019). Dell is investing in other companies developing the same products through partnership to be at the forefront of future technologies. Although the two companies are very competitive, CISCO seems like it’s not putting extra effort towards maximizing their profits as compared to Dell Inc.
Conclusion
This paper thoroughly examined and analyzed both the investing activities and financing activities for Dell and CISCO companies. The analysis showed that the biggest activities in terms of investments included capital expenditures as well as investments. However, Dell invested more heavily than CISCO and as a result, made more revenue when compared to CISCO. The financing activities for both companies involved the dividends paid to the shareholders and the net debt or borrowing made by the businesses. Generally, Dell fared well in terms of debt to equity ratio as compared to CISCO which had a lower ratio of debt to equity.
References
CISCO. (2019). 2019 Annual Report; Defining the Future of internet. CISCO. Retrieved from https://www.cisco.com/c/dam/en_us/about/annual-report/cisco-annual-report-2019.
DELL Technologies. (2020). Dell Technologies Reports Fiscal Year 2020 Fourth Quarter and Full Year Financial Results. PRNewswire. Retrieved from https://www.prnewswire.com/news-releases/dell-technologies-reports-fiscal-year-2020-fourth-quarter-and-full-year-financial-results-301012817.html
Running head: FINANCIAL STATEMENT INFORMATION 1
FINANCIAL STATEMENT INFORMATION 3
Financial Statement Information
Sonya Hatfield
South University Online
FIN 4060
Professor Clark
March 16, 2020
Cisco Systems Inc. and Dell Technologies Inc
The issues which cannot be obtained from the Cisco Systems Inc. and Dell Technologies Inc. financial statements are the actual market value of the firms, and whether fraudulent activity took place within the business. The aforementioned issues turn out to be of concern to any investor, as well as, other stakeholders because on the side of the investors, and they do not purchase stocks on the basis of a firm’s past financials. Buyers do not purchase a firm’s interest simply because it had a great year. The past cannot be the future; thus, intelligent shareholder put their cash into the future. In that respect, they have interests in a firm’s product research, backlog, future revenue streams and other multiple things that indicate the market value of a firm but cannot be derived from the financial statement (AICPA, 2019).
These products as well as services offered through Cisco organization, Inc is also efficiently commercialized. The Cisco Systems was initially marketed throughout educational innovations as well as has extended into the industry leader. Cisco organization commercialized their products as well as services in different means. For instance, Cisco Systems provided conference companies when advertising their goods, which advertised the company as active and engaged to their consumer support. Additionally, Cisco Systems as well as marketplace their products as well as services through getting the non-restrictive way. For example, Cisco Systems also does not consider one kind of application. Rather the corporation pays also close attention to the consumers, new plus future trends, as well as offers a variety of the options to every consumer. As the result of the Cisco organization’s victorious marketing method, the corporation has as well become the foremost industry leader.
Important networks also have been critical to the Cisco organization Inc. The world leader into networking for the Internet, Cisco offers the comprehensive line of the solutions for carrying information, sound, and television at double settings120 and has been regarded with a number of the strategic networks within its pursuit of the competitive success. The Cisco lately broadcasted that it was altering its organizational system. In history, the business’s system had three main business units’ venture, the service provider, as well as commercial. Also, in every chance, this would be the case, even though the development of the strategy in addition to system In Cisco would finally settle the topic.
It should also be noted that from a financial statement, the investors, together with other stakeholders, cannot establish as to whether the firms were involved in fraudulent activities. In order to unearth involvement in fraudulent activity, much effort is required in looking at business practices, as well as, procedures inclusive of routines and benchmarks.
At the early twenty-first century, Dell extended its line of products to contain TVs, digital cameras, and the kind of the computer-related products. Also, In year 2003 the company was as well renamed Dell Inc. To indicate the change into the wider consumer electronics industry. Then in 2016 the company, as well as the finance firm, developed EMC, the American firm that dedicated in information warehousing. This Union, valued in roughly $ 60 billion, was the major technology trade in this moment.
No investor or any stakeholder that has an interest in dealing with a firm that is run by a treacherously management. In the fiscal year ended February 1, 2019, Dell Technologies Inc. made a net loss of $ 2.3 Billion, had total debts of $111.5 billion and an asset turnover of 0.78%. This implies that the firm has to come up with vibrant marketing strategies and introduce highly innovative products in order to scale up its sales and thus increase its revenue. On the side of Cisco Systems Inc. in the fiscal year ended 2019, reported net profitability revenue of the U.S $51.9 billion, had total debts of $24.6 billion and an asset turnover of 0.11%. This is an indication that the firm is performing well financially.
Reference
AICPA. (2019). Codification of Statements on Auditing Standards 2019: numbers 122 to 135. S.l.: John Wiley & Sons.