To answer the questions in this exercise, you will need to download Dell, Inc.s 2005 Form 10-K at You


To answer the questions in this exercise, you will need to download Dell, Inc.’s 2005 Form 10-K at You can view this document on your computer screen; you do not need to print this document to answer the questions.

1. What is Dell’s strategy for success in the marketplace? Does the company rely primarily on a customer 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 these risks?
3. How has the Sarbanes-Oxley Act of 2002 explicitly affected the disclosures contained in Dell’s 10-K report?
4. Is Dell a merchandiser or a manufacturer? What information contained in the 10-K supports your answer?
5. What are some examples of direct and indirect inventoriable costs for Dell? Why has Dell’s gross margin (in dollars) steadily increased from 2003 to 2005, yet the gross margin as a percent of net revenue has only increased slightly?
6. What is the inventory balance on Dell’s January 28, 2005 balance sheet? Why the inventory balance is so small compared to the other current asset balances? What competitive advantage does Dell derive from its low inventory levels? Page 27 of Dell’s 10-K reports a figure called the cash conversion cycle. The cash conversion cycle for Dell has consistently been negative. Is this 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 expenses treated as period costs?
8. List four different cost objects for Dell. For each cost object, mention one example of a direct cost and an indirect cost.

Cash Conversion Cycle
Cash conversion cycle measures the total time a business takes to convert its cash on hand to produce, pay its suppliers, sell to its customers and collect cash from its customers. The process starts with purchasing of raw materials from suppliers,...

This problem has been solved!

Do you need an answer to a question different from the above? Ask your question!

Step by Step Answer:

Related Book For  answer-question

Managerial Accounting

ISBN: 9780073526706

12th Edition

Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer

Question Details
Chapter # 2
Section: Exercises
Problem: 32
View Solution
Create a free account to access the answer
Cannot find your solution?
Post a FREE question now and get an answer within minutes. * Average response time.
Question Posted: March 30, 2012 07:09:47