At various points in this book, Dell, Inc., the computer manufacturer, has been highlighted. The firm's 2008 financial statements are reproduced in Exhibit 2.1 in Chapter 2 and its reformulated balance sheets and income statements appear in Exhibits 9.4 and 9.10 in Chapter 9. Reported cash flows for 2008 were investigated in Box 4.5 in Chapter 4. This case requires you to pull all this analysis together. The firm's tax rate is 35 percent.

A. Using Method 1 calculates Dell's free cash flow from its reformulated financial statements in Exhibits 9.4 and 9.10.Then calculates the free cash flow directly from the cash flow statement. Why might the two numbers differ?

B. Using Method 2 for calculating free cash flows, can you back out what the net payment to shareholders (net dividend) was in 2007?

C. Now calculate the net payout to shareholders from the cash flow statement in Exhibit 2.1 and from the equity statement in that same exhibit. Do the two numbers agree? Do they agree with the number you calculated in part B?

D. In 2008, Dell reported excess tax benefits from stock-based compensation as part of the financing section of the cash flow statement. Exhibit 2.1 shows that this item was reported as cash from operations in 2006. The change was required by FASB Statement 123R. What do you think is the appropriate treatment?

E. Dell reported proceeds from the issue of stock under employee plans of $153 million in its equity statement for 2008. Yet it reported $136 million for these stock issues in the financing section of its cash flow statement. Why is there a difference?

F. There formulated balance sheet for 2008 (in Exhibit 9.4) shows that Dell is sitting on a large" cash pile. "What might Dell do with the cash?