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he questions in this exercise are based on Dell, Inc. To answer the questions, you will need to download Dell's Form 10-K for the fi scal year ended...
he questions in this exercise are based on Dell, Inc. To answer the questions, you will need todownload Dell’s Form 10-K for the fi scal year ended January 28, 2005 by going to www.sec.gov/edgar/searchedgar/companysearch.html. Input CIK code 826083 and hit enter. In the gray box onthe right-hand side of your computer screen defi ne the scope of your search by inputting 10-K andthen pressing enter. Select the 10-K with a filing date of March 8, 2005.Required:1. What is Dell’s strategy for success in the marketplace? Does the company rely primarily on acustomer intimacy, operational excellence, or product leadership customer value proposition?What evidence supports your conclusion?2. What business risks does Dell face that may threaten its ability to satisfy stockholder expectations?What are some examples of control activities that the company could use to reduce theserisks? (Hint: Focus on pages 7–10 of the 10-K.)3. How has the Sarbanes-Oxley Act of 2002 explicitly affected the disclosures contained in Dell’s10-K report? (Hint: Focus on pages 34–35, 59, and 76–78.)4. Is Dell a merchandiser or a manufacturer? What information contained in the 10-K supports youranswer?5. What are some examples of direct and indirect inventoriable costs for Dell? Why has Dell’sgross margin (in dollars) steadily increased from 2003 to 2005, yet the gross margin as a percentof net revenue has only increased slightly?6. What is the inventory balance on Dell’s January 28, 2005 balance sheet? Why is the inventorybalance so small compared to the other current asset balances? What competitive advantagedoes Dell derive from its low inventory levels? Page 27 of Dell’s 10-K reports a fi gure called thecash conversion cycle. The cash conversion cycle for Dell has consistently been negative. Isthis a good sign for Dell or a bad sign? Why?7. Describe some of the various types of operating expenses incurred by Dell. Why are these expensestreated as period costs?8. List four different cost objects for Dell. For each cost object, mention one example of a directcost and an indirect cost.
