Andrew Potter is examining an abbreviated common-size cash flow statement for Dell Inc. (NASDAQ: DELL), a provider of technological products and services. The common-size cash flow statement was prepared by dividing each line item by total net revenue for the same year. The terminology is that used by Dell. “Change in cash from” is used instead of “cash provided by (used in).”

Based on the information in the above exhibit:
1. Discuss the significance of 

A. depreciation and amortization.

B. capital expenditures.

2. Compare Dell’s operating cash flow as a percentage of revenue with Dell’s net profit margin.

3. Discuss Dell’s use of its positive operating cash flow.

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Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Stock-based compensation In-process research and development charges Effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies Deferred income taxes Provision for doubtful accounts including financing receivables Other Changes in operating assets and liabilities, net of effects from acquisitions: 29 Jan 10 2.71% 1.61 0.59 0.00 0.11 (0.10) 0.81 0.19 30 Jan 09 4.06% 1.26 0.68 0.00 (0.19) 0.14 0.51 0.05 1 Feb 08 4.82% 0.99 0.54 0.14 0.05 (0.50) 0.31 0.05