InstructionsYou should begin working on the Stand-Alone Project early in the course. Each lesson provides a benchmark for completing the Stand-Alone Project in a timely manner while working through the course. You will find this information in the “Stand-Alone Project Benchmark” section of each lesson.Project OverviewThis financial statement analysis requires you to make a specific decision about Apple Computer, Inc. in January 2003. You should base your decision on the information available through December 2002, which can be found in Supplement I and Supplement II, and Appendix A of your text. Use Dell’s and Gateway’s financial data to benchmark Apple’s performance in this case analysis.Situation: You are a senior loan officer at a multinational bank. Apple Computer’s chief financial officer, authorized by the company’s Board of Directors, has applied for a ten-year note in the amount equal to one-fourth (25\%) of existing shareholders’ equity as of December 31, 2002. The company seeks financing for long-term asset expansion. Terms call for interest at the prime rate plus one percent payable annually at December 31, with principal repayment when the note comes due in ten years (January 2013).Decision: Your task is to make a recommendation to approve or reject Apple’s application to the bank’s loan committee. Your recommendation should be based on a thorough examination of Apple’s financial statements, their components (e.g., cash flow analysis), related disclosures, performance relative to the competition, state of the economy, and industry conditions.Decision Report Format: Your recommendation should include a comprehensive analysis of Apple Computer, its competitors (Dell and Gateway), and the industry. The first page of your paper should be a one-page “executive summary” addressed to the loan committee containing your recommendation and its justification. The remainder of the paper should contain the analysis that led to your conclusion. There is no page limit on the paper’s appendices. The appendices should contain all worksheets, charts, tables, and so forth that support the positions and recommendations in your paper.Your Stand-Alone Project responses should be both grammatically and mechanically correct and formatted in the same fashion as the project itself. If there is a Part A, your response should identify a Part A, etc. In addition, you must appropriately cite all resources used in your response and document them in a bibliography using APA style. (280 points) (A 10-page, double-spaced, narrative response plus appendices are required.)Project GuidelinesThis case focuses on your decision-making process. Either conclusion is valid as long as your recommendation is consistent with your analysis of the data. Use the following criteria as a guide in framing your responses.This case analysis, like all cases, contains abstractions of reality and simplified assumptions. Use the facts of the case as given in conducting your analysis. Resist the temptation to dispute the facts or assumptions. Also, refrain from modifying them to suit your interpretation of reality. (For instance, do not state that the note’s structure or interest rate is unrealistic and then proceed to modify them.)In Lessons 3 through 6, you will analyze specific financial statement components (e.g., short-term liquidity). You will then apply your analysis to determine whether Apple has sufficient current assets to meet maturing obligations and base your conclusions on your interpretation of the data. Remember, analysis requires attaching meaning to the information. In other words, it is far more than reciting trends in ratios over time.The following project parts facilitate your paper’s composition, as discussed in the “Decision Report Format” above. Your Stand-Alone Project paper should address the following issues and should do so in a seamless, integrated fashion rather than presenting a series of independent responses to the issues raised and questions asked in the lesson benchmarks. (Remember that you will not be able to begin this project until you have completed Lesson 1.) Part A Begin your financial report on Apple Computer by analyzing Apple, Dell, and Gateway. (28 points) 1. Determine the requested loan amount (rounded to the nearest million) and its interest rate. 2. Make a preliminary assessment of the financial condition and performance of Apple, Dell, and Gateway. Begin by comparing the common sized data of the latter two (2) companies’ income statements and balance sheets from 1999-2002 to that of Apple’s financial statements you created in Lesson 1. 3. Analyze the revenue growth of each of the three (3) firms, their net income as a percentage of sales, current assets as a percentage of total assets, and liabilities as a percentage of total assets from 1998 through 2002. Part B Examine the global economy as it impacts the computer industry. (30 points) 1. Discuss the impacts of global, economic and industry conditions on the personal computer industry through 2002. 2. Classify the industry as either an emerging, growing, mature, or declining segment of the economy. 3. Compare and contrast Apple’s products and markets with those of Dell and Gateway. 4. Determine if each firm files consolidated financial statements and discuss the analytical implication associated with the companies’ fiscal years. Identify the type of audit report each company received in its 2002 Form 10-K filing and discuss the implications of that report on the credibility of the firms’ financial disclosures. 5. Compare and contrast inventory costing, methods of depreciation, and revenue recognition policies for Apple, Dell, and Gateway. Identify which of those three (3) accounting policies (inventory costing, depreciation methods, or revenue recognition) would be more important than the other two in influencing your loan recommendation. Part C Look at the financial stability of all three (3) companies by analyzing their liquidity rates. (54 points) 1. Add the short-term liquidity ratios for Dell and Gateway to Apple’s short-term liquidity ratio charts that you created in Lesson 3. Use the 1999-2002 ratios contained in Supplement II for Dell and Gateway and their 1994-1998 ratios presented in Appendix A (page 346 of your textbook) to accomplish this task. 2. Analyze Apple’s short-term liquidity. Be sure to discuss each of the seventeen (17) liquidity measures. 3. Compare Apple’s short-term liquidity measures with those of Dell and Gateway. In doing so, you should determine if the data indicate that Apple has historically been able to meet its maturing obligations, and then project whether it will be able to do so in the near future. 4. Discuss whether technical adjustments for LIFO reserves or LIFO liquidation are necessary. (Ignore other technical adjustments, such as substituting purchases for cost of goods sold in computing accounts payable turnover.) Part D In addition to liquidity rate, cash flow is an important indicator of a company’s financial stability. For that reason, analyze the cash flow of all three (3) companies. (37 points) 1. Add the cash flow ratios for Dell and Gateway to Apple’s cash flow ratio charts that you created in Lesson 4. Use the 1999-2002 ratios contained in Supplement II for Dell and Gateway and their 1994-1998 ratios presented in Appendix A (page in your text) to accomplish this task. 2. Analyze Apple’s cash flow. In doing so, you should determine whether the data indicate that Apple has historically been able to sufficiently and efficiently generate cash, and then project whether it will be able to do so in the near future, given its life cycle stage. 3. Compare Apple’s cash flows with those of Dell and Gateway. Part E Analyze the assets and operating performance of each company. (35 points) 1. Add the asset utilization ratios for Dell and Gateway to Apple’s asset utilization ratio charts that you created in Lesson 5. Use the 1999-2002 ratios contained in Supplement II for Dell and Gateway and their 1994-1998 ratios presented in Appendix A (page 346 in your text) to accomplish this task. 2. Analyze Apple’s operating performance and asset utilization. In doing so, you should determine if the data indicate that Apple has historically generated quality earnings and produced adequate investment returns, and then project whether it will be able to do so in the near future. 3. Compare Apple’s operating performance and asset utilization with those of Dell and Gateway. 4. Discuss whether technical adjustments should be made to returns on assets and equity. (Do not make the numerical adjustments if you think they are necessary.) Part F Combine some of your prior research and begin thinking seriously about whether Apple Computers should get the loan. (66 points) 1. Add the capital structure ratios for Dell and Gateway to Apple’s capital structure ratio charts that you created in Lesson 6. Use the 1999-2002 ratios contained in Supplement II for Dell and Gateway and their 1994-1998 ratios presented in Appendix A (page 346 in your text) to accomplish this task. 2. Analyze Apple’s capital structure. In doing so, you should determine if the data indicate that Apple has historically achieved an acceptable balance between debt and equity financing, and then project whether it will be able to do so in the near future. 3. Compare Apple’s capital structure with those of Dell and Gateway. 4. Compute and compile Apple’s January 1, 2003 pro forma balance sheet assuming the loan is made on that date. 5. Calculate optimistic, likely, and pessimistic 2003 pro forma income statements for Apple. Assume the loan took place on January 1, 2003; income statement line items increase by 10\% (optimistic), 5\% (likely), and 1\% (pessimistic) from their 2002 amounts; there are no unusual, nonrecurring items, or irregular items that occur in 2003; and the effective income tax rate is 25\%. 6. Compute Apple’s 2003 earnings coverage ratio (times interest earned ratio) under the optimistic, likely, and pessimistic income scenarios. Comment on Apple’s ability to cover interest incurred from the January 2003 loan. (Ignore interest expense on other loans in making the calculations.) 7. Regardless of your pro forma income statements, forecast a $.25 EPS range for Apple in 2003 (e.g., earnings will range from $.35 to $.60 per share). Justify your estimated range. 8. Based on your EPS forecast, project Apple’s 2003 price to earnings ratio with a range of five (e.g., the P/E ratio will fall between 15:1 and 20:1). Justify your estimated range. 9. Rank order Apple, Dell, and Gateway from highest to lowest in terms of EPS and price to earnings forecasts for 2003. Part G Write an Executive Summary explaining your position on Apple’s loan in light of the analysis you have done throughout the course. (30 points) 1. Discuss the major points concerning the computer industry as a whole that the bank would have to consider in making this loan. 2. Discuss four (4) factors disfavoring the granting of the loan. 3. Discuss four (4) factors favoring the granting of the loan. 4. Write a conclusion that states your loan recommendation and includes your rational for the recommendation. I HAVE ANSWER FOR THIS PROJECT WHICH IS CONSIDERED AS A POPULAR ANSWER ON THE INTERNET SO IT IS PLAGIARIZED. I HAVE NO ANY OTHER CHANCE IN MY COURSE FOR PLAGIARISMInstructions
You should begin working on the Stand-Alone Project early in the course. Each lesson provides a
benchmark for completing the Stand-Alone Project in a timely manner while working through the course. You
will find this information in the “Stand-Alone Project Benchmark” section of each lesson.
Project Overview
This financial statement analysis requires you to make a specific decision about Apple Computer, Inc. in
January 2003. You should base your decision on the information available through December 2002, which can
be found in Supplement I and Supplement II, and Appendix A of your text. Use Dell’s and Gateway’s financial
data to benchmark Apple’s performance in this case analysis.
Situation: You are a senior loan officer at a multinational bank. Apple Computer’s chief financial officer,
authorized by the company’s Board of Directors, has applied for a ten-year note in the amount equal to onefourth (25\%) of existing shareholders’ equity as of December 31, 2002. The company seeks financing for longterm asset expansion. Terms call for interest at the prime rate plus one percent payable annually at December
31, with principal repayment when the note comes due in ten years (January 2013).
Decision: Your task is to make a recommendation to approve or reject Apple’s application to the bank’s loan
committee. Your recommendation should be based on a thorough examination of Apple’s financial statements,
their components (e.g., cash flow analysis), related disclosures, performance relative to the competition, state
of the economy, and industry conditions.
Decision Report Format: Your recommendation should include a comprehensive analysis of Apple Computer,
its competitors (Dell and Gateway), and the industry. The first page of your paper should be a one-page
“executive summary” addressed to the loan committee containing your recommendation and its justification.
The remainder of the paper should contain the analysis that led to your conclusion. There is no page limit on
the paper’s appendices. The appendices should contain all worksheets, charts, tables, and so forth that support
the positions and recommendations in your paper.
Your Stand-Alone Project responses should be both grammatically and mechanically correct and formatted in
the same fashion as the project itself. If there is a Part A, your response should identify a Part A, etc. In
addition, you must appropriately cite all resources used in your response and document them in a bibliography
using APA style. (280 points) (A 10-page, double-spaced, narrative response plus appendices are required.)
Project Guidelines
This case focuses on your decision-making process. Either conclusion is valid as long as your recommendation
is consistent with your analysis of the data. Use the following criteria as a guide in framing your responses.
This case analysis, like all cases, contains abstractions of reality and simplified assumptions. Use the facts of
the case as given in conducting your analysis. Resist the temptation to dispute the facts or assumptions. Also,
refrain from modifying them to suit your interpretation of reality. (For instance, do not state that the note’s
structure or interest rate is unrealistic and then proceed to modify them.)
In Lessons 3 through 6, you will analyze specific financial statement components (e.g., short-term liquidity).
You will then apply your analysis to determine whether Apple has sufficient current assets to meet maturing
obligations and base your conclusions on your interpretation of the data. Remember, analysis requires
attaching meaning to the information. In other words, it is far more than reciting trends in ratios over time.
The following project parts facilitate your paper’s composition, as discussed in the “Decision Report Format”
above. Your Stand-Alone Project paper should address the following issues and should do so in a seamless,
integrated fashion rather than presenting a series of independent responses to the issues raised and questions
asked in the lesson benchmarks. (Remember that you will not be able to begin this project until you have
completed Lesson 1.)
Part A
Begin your financial report on Apple Computer by analyzing Apple, Dell, and
Gateway. (28 points)
1. Determine the requested loan amount (rounded to the nearest million) and its
interest rate.
2. Make a preliminary assessment of the financial condition and performance of
Apple, Dell, and Gateway. Begin by comparing the common sized data of the
latter two (2) companies’ income statements and balance sheets from 1999-2002
to that of Apple’s financial statements you created in Lesson 1.
3. Analyze the revenue growth of each of the three (3) firms, their net income as a
percentage of sales, current assets as a percentage of total assets, and liabilities
as a percentage of total assets from 1998 through 2002.
Part B
Examine the global economy as it impacts the computer industry. (30 points)
1. Discuss the impacts of global, economic and industry conditions on the personal
computer industry through 2002.
2. Classify the industry as either an emerging, growing, mature, or declining
segment of the economy.
3. Compare and contrast Apple’s products and markets with those of Dell and
Gateway.
4. Determine if each firm files consolidated financial statements and discuss the
analytical implication associated with the companies’ fiscal years. Identify the
type of audit report each company received in its 2002 Form 10-K filing and
discuss the implications of that report on the credibility of the firms’ financial
disclosures.
5. Compare and contrast inventory costing, methods of depreciation, and revenue
recognition policies for Apple, Dell, and Gateway. Identify which of those three
(3) accounting policies (inventory costing, depreciation methods, or revenue
recognition) would be more important than the other two in influencing your
loan recommendation.
Part C
Look at the financial stability of all three (3) companies by analyzing their
liquidity rates. (54 points)
1. Add the short-term liquidity ratios for Dell and Gateway to Apple’s short-term
liquidity ratio charts that you created in Lesson 3. Use the 1999-2002 ratios
contained in Supplement II for Dell and Gateway and their 1994-1998 ratios
presented in Appendix A (page 346 of your textbook) to accomplish this task.
2. Analyze Apple’s short-term liquidity. Be sure to discuss each of the seventeen
(17) liquidity measures.
3. Compare Apple’s short-term liquidity measures with those of Dell and
Gateway. In doing so, you should determine if the data indicate that Apple has
historically been able to meet its maturing obligations, and then project whether
it will be able to do so in the near future.
4. Discuss whether technical adjustments for LIFO reserves or LIFO liquidation
are necessary. (Ignore other technical adjustments, such as substituting
purchases for cost of goods sold in computing accounts payable turnover.)
Part D
In addition to liquidity rate, cash flow is an important indicator of a company’s
financial stability. For that reason, analyze the cash flow of all three (3)
companies. (37 points)
1. Add the cash flow ratios for Dell and Gateway to Apple’s cash flow ratio charts
that you created in Lesson 4. Use the 1999-2002 ratios contained in Supplement
II for Dell and Gateway and their 1994-1998 ratios presented in Appendix A
(page in your text) to accomplish this task.
2. Analyze Apple’s cash flow. In doing so, you should determine whether the data
indicate that Apple has historically been able to sufficiently and efficiently
generate cash, and then project whether it will be able to do so in the near
future, given its life cycle stage.
3. Compare Apple’s cash flows with those of Dell and Gateway.
Part E
Analyze the assets and operating performance of each company. (35 points)
1. Add the asset utilization ratios for Dell and Gateway to Apple’s asset utilization
ratio charts that you created in Lesson 5. Use the 1999-2002 ratios contained in
Supplement II for Dell and Gateway and their 1994-1998 ratios presented in
Appendix A (page 346 in your text) to accomplish this task.
2. Analyze Apple’s operating performance and asset utilization. In doing so, you
should determine if the data indicate that Apple has historically generated
quality earnings and produced adequate investment returns, and then project
whether it will be able to do so in the near future.
3. Compare Apple’s operating performance and asset utilization with those of Dell
and Gateway.
4. Discuss whether technical adjustments should be made to returns on assets and
equity. (Do not make the numerical adjustments if you think they are
necessary.)
Part F
Combine some of your prior research and begin thinking seriously about whether
Apple Computers should get the loan. (66 points)
1. Add the capital structure ratios for Dell and Gateway to Apple’s capital
structure ratio charts that you created in Lesson 6. Use the 1999-2002 ratios
contained in Supplement II for Dell and Gateway and their 1994-1998 ratios
presented in Appendix A (page 346 in your text) to accomplish this task.
2. Analyze Apple’s capital structure. In doing so, you should determine if the data
indicate that Apple has historically achieved an acceptable balance between debt
and equity financing, and then project whether it will be able to do so in the near
future.
3. Compare Apple’s capital structure with those of Dell and Gateway.
4. Compute and compile Apple’s January 1, 2003 pro forma balance sheet
assuming the loan is made on that date.
5. Calculate optimistic, likely, and pessimistic 2003 pro forma income statements
for Apple. Assume the loan took place on January 1, 2003; income statement
line items increase by 10\% (optimistic), 5\% (likely), and 1\% (pessimistic) from
their 2002 amounts; there are no unusual, nonrecurring items, or irregular items
that occur in 2003; and the effective income tax rate is 25\%.
6. Compute Apple’s 2003 earnings coverage ratio (times interest earned ratio)
under the optimistic, likely, and pessimistic income scenarios. Comment on
Apple’s ability to cover interest incurred from the January 2003 loan. (Ignore
interest expense on other loans in making the calculations.)
7. Regardless of your pro forma income statements, forecast a $.25 EPS range for
Apple in 2003 (e.g., earnings will range from $.35 to $.60 per share). Justify
your estimated range.
8. Based on your EPS forecast, project Apple’s 2003 price to earnings ratio with a
range of five (e.g., the P/E ratio will fall between 15:1 and 20:1). Justify your
estimated range.
9. Rank order Apple, Dell, and Gateway from highest to lowest in terms of EPS
and price to earnings forecasts for 2003.
Part G
Write an Executive Summary explaining your position on Apple’s loan in light of
the analysis you have done throughout the course. (30 points)
1. Discuss the major points concerning the computer industry as a whole that the
bank would have to consider in making this loan.
2. Discuss four (4) factors disfavoring the granting of the loan.
3. Discuss four (4) factors favoring the granting of the loan.
4. Write a conclusion that states your loan recommendation and includes your
rational for the recommendation.
Apple Computer, Inc.
Income Statement
(in millions of dollars)
Net sales
Cost of sales
Gross margin
Operating expenses:
Research and development
Selling, general and administration
Executive bonus
Restructuring costs
In-process research and development
Total operating expenses
Operating income
Other income and (expenses)
Income (loss) before taxes
Provision (benefit) for taxes
Net income (loss)
$
Basic EPS
Diluted EPS
$
$
$
2002
5,742
4,139
1,603
446
1,111
(2)
30
1
1,586
17
70
87
22
65 $
0.18
0.18
2001
$5,363 $
4,128
1,235
2000
7,983
5,817
2,166
430
1,138
11
1,579
(344)
304
(40)
(15)
(25) $
380
1,166
90
8
1,644
522
570
1,092
306
786
($0.07) $
($0.07) $
2.42
2.18
Table A: Apple Income Statement
Apple Computer, Inc.
Balance Sheet
(in millions of dollars)
Assets
Current Assets
Cash and equivalents
Short-term investments
Accounts receivable, net
Inventories
Deferred tax assets
Other current assets
Total current assets
Property, plant & equipment, net
Non-current investments
Other assets
2002
$
2,252
2,085
565
45
166
275
5,388
621
39
250
2001
$
2,310
2,026
466
11
169
161
5,143
564
128
186
2000
$
1,191
2,836
953
33
162
252
5,427
313
786
277
Total assets
Liabilities
Current Liabilities
Notes payable
Accounts payable
Accrued expenses
Total current liabilities
Long-term debt
Deferred tax liabilities
Total liabilities
Shareholders Equity
Preferred stock
Common stock
Retained earnings
Other equity
Total shareholders equity
Total liabilities and S/E
$
6,298
$
911
747
1,658
316
229
2,203
$
1,826
2,325
(56)
4,095
6,298
$
$6,021 $
6,803
$
801
717
1,518
317
266
2,101
1,157
776
1,933
300
463
2,696
0
1,693
2,260
-33
3,920
$6,021 $
76
1,502
2,285
244
4,107
6,803
Table B: Apple Balance Sheet
Apple Computer, Inc.
Statements of Cash Flows
(in millions of dollars)
Operating Activities
Net income (loss)
Depreciation and amortization expense
Deferred income taxes
IPRD and gains from equity sales
Change in accounts receivable
Change in inventory
Change in accounts payable
Restructuring costs
Other
Cash generated by operating act.
Investing Activities
Purchase of short-term investments
Proceeds from sale of S-T investments
$
$
$
2002
2001
2000
65
118
(34)
42
(99)
(34)
110
(79)
89
($25) $
102
(36)
(88)
487
22
(356)
$
786
84
163
(364)
(272)
(13)
345
(27)
124
826
($4,268) $
5,089
(4,267)
3,331
(4,144)
4,100
79
$185
Proceeds from sale of P,P&E
Purchase of P,P&E
Acquisition of technology
Proceeds from sale of equity invest.
Other
Cash used for investing activities
Financing Activities
Notes payable to bank
Long-term borrowings
Proceeds from issuance of pref. stock
Increase in common stock, net
Dividends
Cash generated by financing act.
(174)
$
$
25
(59)
(252)
$
105
105
Total cash generated (used)
$
(58)
Cash and cash equiv., beginning of year
Cash and cash equivalents, end of year
$
$
2,310
2,252
(232)
340
(37)
$892 $
11
(107)
372
(270)
(930)
42
$42
$
(31.00)
(31)
$1,119
$
(135)
$1,191
$2,310
$
$
1,326
1,191
Table C: Apple Statement of Cash Flows
$
1999
6,134 $
4,438
1,696
1998
5,941
4,462
1,479
314
996
303
908
$
27
1,337
359
317
676
75
601
7
1,218
261
68
329
20
309
$
$
2.10
1.81
$
$2.34
$2.10
t
1999
$
1,326
1,900
681
20
143
215
4,285
318
339
219
1998
$
1,481
819
955
78
365
3,698
348
243
$
5,161
$
4,289
$
812
737
1,549
300
208
2,057
$
$
719
801
1,520
954
173
2,647
$
150
633
898
(39)
1,642
4,289
$
$
$
$
150
1,349
1,499
106
3,104
5,161
1999
1998
601 $
85
(35)
(230)
274
58
93
2
(50)
798 $
309
111
1
7
72
359
34
(107)
(11)
775
(4,236) $
3,155
(2,313)
1,723
ows
23
(47)
$
$
$
$
$
245
(104)
(964) $
11.00
11
$
89
(46)
(10)
24
(10)
(543)
(25)
3
41
$
19
(155) $
251
1,481
1,326
$
$
1,230
1,481
Dell Income Statements
(in millions of dollars)
Sales revenues
Cost of goods sold
Gross profit
Selling, general and administrative expenses
Research and development expense
Special charges
Total operating expenses
Operating income
Other gains and losses
Pretax income
Tax expense
Income before extraordinary items
Extraordinary items or accounting change
Net income
$
Basic EPS
Diluted EPS
$
$
$
2002
31,168
25,661
5,507
2,784
452
482
3,718
1,789
(58)
1,731
485
1,246
1,246
0.48
0.46
2001
$31,888 $
25,445
6,443
3,193
482
105
3,780
2,663
531
3,194
958
2,236
59
$2,177 $
$0.84
$0.79
$
$
2000
25,265
20,047
5,218
2,387
374
194
2,955
2,263
188
2,451
785
1,666
1,666
0.60
0.60
Table 1: Dell Income Statements
Dell Balance Sheets
(in millions of dollars)
Cash
Short-term Investments
Accounts receivable
Inventory
Other current assets
Total current assets
Property, plant and equipment
Investments
Other assets
Total assets
$
Accounts Payable
Accrued Liabilities
Total current liabilities
Long-term debt
Warranty payable
Other liabilities
$
$
2002
3,641
273
2,269
278
1,416
7,877
826
4,373
459
13,535
5,075
2,444
7,519
520
802
2001
$4,910 $
528
2,895
400
758
9,491
996
2,418
530
$13,435 $
$4,286
2,257
6,543
509
761
$
2000
3,809
323
2,608
391
550
7,681
765
2,721
304
11,471
3,538
1,654
5,192
508
463
Total liabilities
Preferred stock
Common stock
Retained earnings
Other comprehensive income
Other equity adjustments
Total shareholders equity
Total liabilities and shareholders equity
8,841
$
5,605
1,364
(26)
(2,249)
4,694
13,535
7,813
4,795
839
62
(74)
5,622
$13,435 $
6,163
3,583
1,260
533
(68)
5,308
11,471
Table 2: Dell Balance Sheets
Dell Computer, Inc.
Statement of Cash Flows
(in millions of dollars)
2002
Operating:
Net income (loss)
Depreciation and amortization expense
Tax benefits of employee stock plans
Special charges
Gain on sale of investments
Other
Changes in operating working capital
Non-current assets and liabilities
Cash generated by operating activities
Investing:
Securities purchases
Securities sales
Capital expenditures
Net cash used for investing activities
Financing:
Purchase of common stock
Issuance of debt
Repurchase of notes payable
Issuance of common stock
Issuance of preferred stock
Sale of equity options
Preferred stock dividends
Other
Net cash generated by financing activities
Foreign exchange effect on cash
$
2001
2000
1,246
239
487
742
17
178
826
62
3,797
$2,177 $
240
929
105
(307)
109
671
271
$4,195 $
1,666
156
1,040
194
(80)
56
812
82
3,926
$
(5,382)
3,425
(303)
(2,260)
($2,606) $
2,331
(482)
($757) $
(3,101)
2,319
(401)
(1,183)
$
(3,000) $
295
(2,700) $
404
3
(2,702) $
(9)
(2,305) $
(1,061)
20
289
57
(695)
(104)
(32)
$
$
$
35
Total cash generated (used)
$
(1,269)
$1,101 $
2,083
Cash and cash equiv., beginning of year
Cash and cash equivalents, end of year
$
$
4,910
3,641
$3,809 $
$4,910 $
1,726
3,809
Table 3: Dell Statement of Cash Flows
$
1999
18,243 $
14,137
4,106
1,788
272
2,060
2,046
38
2,084
624
1,460
1,460 $
$
$
0.58
0.53
$
$
$
$
$
$
1998
12,327
9,605
2,722
1,202
204
1,406
1,316
52
1,368
424
944
944
1.44
1.28
1999
520 $
2,661
2,094
273
791
6,339
523
15
6,877 $
1998
320
1,524
1,486
233
349
3,912
342
2,397
1,298
3,695
512
349
1,643
1,054
2,697
17
225
36
$
14
4,268
$
4,556
1,781
606
(66)
2,321
6,877 $
1999
$
$
$
$
$
$
1,460 $
103
444
(9)
20
367
51
2,436 $
2,975
747
607
(61)
1,293
4,268
1998
944
67
24
529
28
1,592
(1,938) $ (12,305)
1,304
12,017
(296)
(187)
(930) $
(475)
(1,518) $
494
212
(812) $
(10)
(1,023)
88
38
(1)
(898)
(14)
$
684
$
205
$
$
1,042
1,726
$
$
115
320
Dell Income Statements
Vertical Common Size
Sales revenues
Cost of goods sold
Gross profit
Selling, general and administrative expenses
Research and development expense
Special charges
Total operating expenses
Operating income
Other gains and losses
Pretax income
Tax expense
Income before extraordinary items
Extraordinary items or accounting change
Net income
2002
100.0\%
82.3\%
17.7\%
8.9\%
1.5\%
1.5\%
11.9\%
5.7\%
-0.2\%
5.6\%
1.6\%
4.0\%
0.0\%
4.0\%
2001
100.0\%
79.8\%
20.2\%
10.0\%
1.5\%
0.3\%
11.9\%
8.4\%
1.7\%
10.0\%
3.0\%
7.0\%
0.2\%
6.8\%
2000
100.0\%
79.3\%
20.7\%
9.4\%
1.5\%
0.8\%
11.7\%
9.0\%
0.7\%
9.7\%
3.1\%
6.6\%
0.0\%
6.6\%
1999
100.0\%
77.5\%
22.5\%
9.8\%
1.5\%
0.0\%
11.3\%
11.2\%
0.2\%
11.4\%
3.4\%
8.0\%
0.0\%
8.0\%
1998
100.0\%
77.9\%
22.1\%
9.8\%
1.7\%
0.0\%
11.4\%
10.7\%
0.4\%
11.1\%
3.4\%
7.7\%
0.0\%
7.7\%
Table 4: Dell Vertical Common Size Income Statements
Dell Income Statements
Horizontal Common Size–Rolling Forward
Sales revenues
Cost of goods sold
Gross profit
Selling, general and administrative expenses
Research and development expense
Special charges
Total operating expenses
Operating income
Other gains and losses
Pretax income
Tax expense
Income before extraordinary items
Extraordinary items or accounting change
Net income
2002
97.7\%
100.8\%
85.5\%
87.2\%
93.8\%
2001
126.2\%
126.9\%
123.5\%
133.8\%
128.9\%
2000
138.5\%
141.8\%
127.1\%
133.5\%
137.5\%
1999
148.0\%
147.2\%
150.8\%
148.8\%
133.3\%
1998
100.0\%
100.0\%
100.0\%
100.0\%
100.0\%
98.4\%
67.2\%
-10.9\%
54.2\%
50.6\%
55.7\%
127.9\%
117.7\%
282.4\%
130.3\%
122.0\%
134.2\%
143.4\%
110.6\%
494.7\%
117.6\%
125.8\%
114.1\%
146.5\%
155.5\%
73.1\%
152.3\%
147.2\%
154.7\%
100.0\%
100.0\%
100.0\%
100.0\%
100.0\%
100.0\%
57.2\%
130.7\%
114.1\%
154.7\%
100.0\%
Table 5: Dell Horizontal Common Size Income Statements
Dell Balance Sheets
Vertical Common Size
Cash
Short-term Investments
Accounts receivable
Inventory
Other current assets
Total current assets
Property, plant and equipment
Investments
Other assets
Total assets
2002
26.9\%
2.0\%
16.8\%
2.1\%
10.5\%
58.2\%
6.1\%
32.3\%
3.4\%
100.0\%
2001
36.5\%
3.9\%
21.5\%
3.0\%
5.6\%
70.6\%
7.4\%
18.0\%
3.9\%
100.0\%
2000
33.2\%
2.8\%
22.7\%
3.4\%
4.8\%
67.0\%
6.7\%
23.7\%
2.7\%
100.0\%
1999
7.6\%
38.7\%
30.4\%
4.0\%
11.5\%
92.2\%
7.6\%
0.0\%
0.2\%
100.0\%
1998
7.5\%
35.7\%
34.8\%
5.5\%
8.2\%
91.7\%
8.0\%
0.0\%
0.3\%
100.0\%
Accounts Payable
Accrued Liabilities
Total current liabilities
Long-term debt
Warranty payable
Other liabilities
Total liabilities
Preferred stock
Common stock
Retained earnings
Other comprehensive income
Other equity adjustments
Total shareholders equity
Total liabilities and shareholders equity
37.5\%
18.1\%
55.6\%
3.8\%
0.0\%
5.9\%
65.3\%
0.0\%
41.4\%
10.1\%
-0.2\%
-16.6\%
34.7\%
100.0\%
31.9\%
16.8\%
48.7\%
3.8\%
0.0\%
5.7\%
58.2\%
0.0\%
35.7\%
6.2\%
0.5\%
-0.6\%
41.8\%
100.0\%
30.8\%
14.4\%
45.3\%
4.4\%
0.0\%
4.0\%
53.7\%
0.0\%
31.2\%
11.0\%
4.6\%
-0.6\%
46.3\%
100.0\%
34.9\%
18.9\%
53.7\%
7.4\%
0.0\%
5.1\%
66.2\%
0.0\%
25.9\%
8.8\%
0.0\%
-1.0\%
33.8\%
100.0\%
38.5\%
24.7\%
63.2\%
0.4\%
5.3\%
0.8\%
69.7\%
0.0\%
17.5\%
14.2\%
0.0\%
-1.4\%
30.3\%
100.0\%
Table 6: Dell Vertical Common Size Balance Sheets
Dell Balance Sheets
Horizontal Common Size–Rolling Forward
Cash
Short-term Investments
Accounts receivable
Inventory
Other current assets
Total current assets
Property, plant and equipment
Investments
Other assets
Total assets
Accounts Payable
Accrued Liabilities
Total current liabilities
Long-term debt
Warranty payable
Other liabilities
2002
74.2\%
51.7\%
78.4\%
69.5\%
186.8\%
83.0\%
82.9\%
2001
128.9\%
163.5\%
111.0\%
102.3\%
137.8\%
123.6\%
130.2\%
2000
732.5\%
12.1\%
124.5\%
143.2\%
69.5\%
121.2\%
146.3\%
1999
162.5\%
174.6\%
140.9\%
117.2\%
226.6\%
162.0\%
152.9\%
1998
100.0\%
100.0\%
100.0\%
100.0\%
100.0\%
100.0\%
100.0\%
86.6\%
100.7\%
174.3\%
117.1\%
2026.7\%
166.8\%
107.1\%
161.1\%
100.0\%
100.0\%
118.4\%
108.3\%
114.9\%
102.2\%
121.1\%
136.5\%
126.0\%
100.2\%
147.6\%
127.4\%
140.5\%
99.2\%
145.9\%
123.1\%
137.0\%
3011.8\%
100.0\%
100.0\%
100.0\%
100.0\%
105.4\%
164.4\%
132.7\%
969.4\%
100.0\%
Total liabilities
Preferred stock
Common stock
Retained earnings
Other comprehensive income
Other equity adjustments
Total shareholders equity
Total liabilities and shareholders equity
113.2\%
126.8\%
135.3\%
153.1\%
100.0\%
116.9\%
162.6\%
133.8\%
66.6\%
201.2\%
207.9\%
238.4\%
99.8\%
100.0\%
100.0\%
3039.2\%
83.5\%
100.7\%
108.8\%
105.9\%
117.1\%
103.0\%
228.7\%
166.8\%
108.2\%
179.5\%
161.1\%
100.0\%
100.0\%
100.0\%
Table 7: Dell Horizontal Common Size Balance Sheets
Dell
Liquidity Ratios
Working capital
Working capital ratio
Quick ratio
Inventory turnover
Days in inventory
Accounts receivable turnover
Days in accounts receivable
Inventory conversion cycle
Accounts payable turnover
Days in accounts payable
Net cash conversion cycle
Cash + short-term investments
A/R*days in accounts receivable
Inventory*days in inventory
Product dollar days
Current assets-other current assets
Liquidity index
$
2002
1,653.00 $
1.24
1.03
75.70
4.82
12.07
30.24
35.06
5.48
66.58
-31.52
4,676.00
78,072.20
1,634.63
84,382.82
7,597.00
11.11
2001
2,718.50 $
1.46
1.28
64.34
5.67
11.59
31.49
37.17
6.50
56.12
-18.95
4,785.00
86,657.19
2,243.80
93,685.99
7,932.00
11.81
2000
2,566.50 $
1.58
1.35
60.38
6.04
10.75
33.96
40.01
6.76
54.03
-14.02
3,656.50
79,850.72
2,006.87
85,514.09
6,339.50
13.49
1999
1,929.50
1.60
1.35
55.88
6.53
10.19
35.81
42.35
7.00
52.15
-9.81
2,512.50
64,106.59
1,652.63
68,271.72
4,555.50
14.99
Table 8: Dell Liquidity Ratios
Dell
Cash Flow Ratios
Cash flow adequacy
Reinvestment ratio
Long-term debt repayment
Dividend payout
Free cash flow
Depreciation impact ratio
Recapitalization index
Cash flow return on assets
Cash flow return on sales
Operations index
2002
12.53
0.08
2001
8.70
0.11
2000
9.79
0.10
1999
8.23
0.12
3,494.00
0.06
1.27
0.28
0.12
2.12
3,713.00
0.06
2.01
0.34
0.13
1.58
3,525.00
0.04
2.57
0.43
0.16
1.73
2,140.00
0.04
2.87
0.44
0.13
1.19
2000
6.594\%
2.75
2.41
18.16\%
43.68\%
1999
8.003\%
3.27
3.08
26.20\%
80.80\%
Table 9: Dell Cash Flow Ratios
Dell
Asset Utilization Ratios
Profit margin
Asset turnover
Financial structure leverage
Return on assets
Return on equity
2002
3.998\%
2.31
2.61
9.24\%
24.16\%
2001
6.827\%
2.56
2.28
17.48\%
39.84\%
Table 10: Dell Asset Utilization Ratios
Dell
Capital Structure Ratios
Debt to capital
Debt to equity
Long-term debt to capital
Long-term debt to equity
Working capital/total assets-Z1
Retained earnings/totalassets-Z2
EBIT/total assets-Z3
Sales/total assets-Z4
Market to book-Z5
Z-Score
2002
0.62
1.61
0.10
0.25
0.15
0.11
0.44
2.31
5.06
8.07
2001
0.56
1.28
0.09
0.21
0.26
0.12
0.71
2.56
8.61
12.26
Table 11: Dell Capital Structure Ratios
2000
0.58
1.41
0.10
0.24
0.34
0.14
0.81
2.75
20.73
24.77
1999
0.68
2.08
0.10
0.32
0.42
0.15
1.21
3.27
37.88
42.93
Gateway Income Statements
(in millions of dollars)
Sales revenue
Cost of goods sold
Gross profit
S,G & A expenses
Operating income
Other, net
Income before taxes
Change in accounting principle
Provision for taxes
Net income
$
$
2002
4,171
3,605
566
1,077
(511)
35
476
(167)
(309)
2001
$6,080 $
5,241
839
2,022
(1,184)
106
(1,290)
(24)
(276)
($1,034) $
2000
9,601
7,542
2,059
1,548
511
(103)
408
(12)
155
241
Table 12: Gateway Income Statements
Gateway Balance Sheets
(in millions of dollars)
Cash
Short-term Investments
Accounts receivable
Inventory
Other current assets
Total current assets
Property, plant and equipment
Intangibles
Other assets
Total assets
$
Notes payable
Accounts payable
Accrued liabilities
Other current liabilities
Total current liabilities
Long-term debt
Other liabilities
Total liabilities
Common stock
Additional paid-in-capital
$
$
2002
466
601
198
88
602
1,955
481
23
50
2,509
279
365
296
940
322
1,262
3
733
2001
$731 $
435
220
120
617
2,123
608
36
220
$2,987 $
$
341
469
336
1,146
276
1,422
3
732
$
2000
484
130
545
315
793
2,267
898
166
822
4,153
785
556
289
1,631
141
1,772
3
742
Retained earnings
Other equity adjustments
Total shareholders equity
Total liabilities and shareholders equity
$
307
204
1,247
2,509
616
214
1,565
$2,987
$
1,650
(15)
2,380
4,153
Table 13: Gateway Balance Sheets
Gateway, Inc.
Consolidated Statement of Cash Flows
(in millions of dollars)
Operating:
Net income (loss)
Depreciation and amortization expense
Deferred income taxes
Nonrecurring expenses
Change in accounts receivable
Change in inventory
Change in accounts payable
Other
Cash generated by operating activities
Investing:
Capital expenditures
Purchase of available-for-sale securities
Proceeds from sale of avail.-for-sale sec.
Acquisition of technology
Other
Investment in other long-term investments
Purchase of financing receivables
Cash used for investing activities
Financing:
Proceeds from notes payable
Payments on long-term liabilities
Dividends
Stock options exercised
Proceeds from stock issuance
Purchase of treasury stock
Cash generated by financing activities
Foreign exchange effect on cash
$
$
$
$
$
2002
2001
2000
(298)
159
257
14
11
32
60
(260)
(25)
($1,034) $
200
(30)
646
302
195
(442)
(107)
($270) $
241
189
(54)
165
76
(123)
(113)
(92)
289
(78)
(614)
436
21
(235)
($199) $
(283)
570
(30)
50
$109 $
(315)
(81)
160
(60)
(247)
(410)
(953)
$200 $
(4)
9
200
$405 $
3.0
(9)
(5)

$
(5)
0
3
83
2
(59)
20
0
Total cash generated (used)
$
(265)
$247
$
Cash and cash equiv., beginning of year
Cash and cash equivalents, end of year
$
$
731
466
$484
$731
$
$
(644)
1,128
484
Table 14: Gateway Statement of Cash Flows
$
$
1999
8,965 $
7,128
1,837
1,241
596
67
663
235
428 $
1998
7,467
5,921
1,546
1,052
494
46
540
1999
1,128 $
209
646
192
522
2,697
746
52
460
3,955 $
1998
1,169
158
558
167
176
2,228
530
65
67
2,890
899
609
302
1,810
128
1,938
3
657
11
718
415
285
1,429
3
113
1,545
2
365
194
346
ts
$
$
$
$
$
$
$
$
$
$
$
1,409
(52)
2,017
3,955 $
982
(4)
1,345
2,890
1999
1998
428 $
134
(3)
31
(115)
(24)
182
98
731 $
346
106
(58)
(338) $
(147)
97
(1)
(127)
(315)
(831) $
(235)
(169)
49
(52)
81
229
256
908
(1)
(356)
(6)
(13)
83
100
(123)
54 $
36
23
4
1
lows
$
$
$
(42) $
1,170
1,128
$
$
576
594
1,170
Gateway Income Statements
Vertical Common Size
Sales revenue
Cost of goods sold
Gross profit
S,G & A expenses
Operating income
Other, net
Income before taxes
Change in accounting principle
Provision for taxes
Net income
2002
100.0\%
86.4\%
13.6\%
25.8\%
-12.3\%
0.8\%
11.4\%
0.0\%
-4.0\%
-7.4\%
2001
100.0\%
86.2\%
13.8\%
33.3\%
-19.5\%
1.8\%
-21.2\%
-0.4\%
-4.6\%
-17.0\%
2000
100.0\%
78.6\%
21.4\%
16.1\%
5.3\%
-1.1\%
4.2\%
-0.1\%
1.6\%
2.5\%
1999
100.0\%
79.5\%
20.5\%
13.8\%
6.6\%
0.7\%
7.4\%
0.0\%
2.6\%
4.8\%
1998
100.0\%
79.3\%
20.7\%
14.1\%
6.6\%
0.6\%
7.2\%
0.0\%
2.6\%
4.6\%
1999
120.1\%
120.4\%
118.8\%
118.0\%
120.6\%
145.7\%
122.8\%
0.0\%
121.1\%
123.7\%
1998
100.0\%
100.0\%
100.0\%
100.0\%
100.0\%
100.0\%
100.0\%
0.0\%
100.0\%
100.0\%
Table 15: Gateway Vertical Common Size Income Statements
Gateway Income Statements
Horizontal Common Size–Rolling Forward
Sales revenue
Cost of goods sold
Gross profit
S,G & A expenses
Operating income
Other, net
Income before taxes
Change in accounting principle
Provision for taxes
Net income
2002
68.6\%
68.8\%
67.5\%
53.3\%
43.2\%
32.7\%
-36.9\%
0.0\%
59.6\%
29.9\%
2001
63.3\%
69.5\%
40.7\%
130.6\%
-231.5\%
-103.9\%
-316.2\%
0.0\%
-180.6\%
-429.0\%
2000
107.1\%
105.8\%
112.1\%
124.7\%
85.7\%
-153.7\%
61.5\%
0.0\%
66.0\%
56.3\%
Table 16: Gateway Horizontal Common Size Income Statements
Gateway Balance Sheets
Vertical Common Size
Cash
Short-term Investments
Accounts receivable
Inventory
Other current assets
Total current assets
Property, plant and equipment
Intangibles
Other assets
Total assets
2002
18.6\%
24.0\%
7.9\%
3.5\%
24.0\%
77.9\%
19.2\%
0.9\%
2.0\%
100.0\%
2001
24.5\%
14.6\%
7.4\%
4.0\%
20.7\%
71.1\%
20.4\%
1.2\%
7.4\%
100.0\%
2000
11.7\%
3.1\%
13.1\%
7.6\%
19.1\%
54.6\%
21.6\%
4.0\%
19.8\%
100.0\%
1999
28.5\%
5.3\%
16.3\%
4.9\%
13.2\%
68.2\%
18.9\%
1.3\%
11.6\%
100.0\%
1998
40.4\%
5.5\%
19.3\%
5.8\%
6.1\%
77.1\%
18.3\%
2.2\%
2.3\%
100.0\%
Notes payable
Accounts payable
Accrued liabilities
Other current liabilities
Total current liabilities
Long-term debt
Other liabilities
Total liabilities
Common stock
Additional paid-in-capital
Retained earnings
Other equity adjustments
Total shareholders equity
Total liabilities and shareholders equity
0.0\%
11.1\%
14.5\%
11.8\%
37.5\%
0.0\%
12.8\%
50.3\%
0.1\%
29.2\%
12.2\%
8.1\%
49.7\%
100.0\%
0.0\%
11.4\%
15.7\%
11.2\%
38.4\%
0.0\%
9.2\%
47.6\%
0.1\%
24.5\%
20.6\%
7.2\%
52.4\%
100.0\%
0.0\%
18.9\%
13.4\%
7.0\%
39.3\%
0.0\%
3.4\%
42.7\%
0.1\%
17.9\%
39.7\%
-0.4\%
57.3\%
100.0\%
0.0\%
22.7\%
15.4\%
7.6\%
45.8\%
0.0\%
3.2\%
49.0\%
0.1\%
16.6\%
35.6\%
-1.3\%
51.0\%
100.0\%
0.4\%
24.8\%
14.4\%
9.9\%
49.4\%
0.1\%
3.9\%
53.5\%
0.1\%
12.6\%
34.0\%
-0.1\%
46.5\%
100.0\%
Table 17: Gateway Vertical Common Size Blanace Sheets
Gateway Balance Sheets
Horizontal Common Size–Rolling Forward
Cash
Short-term Investments
Accounts receivable
Inventory
Other current assets
Total current assets
Property, plant and equipment
Intangibles
Other assets
Total assets
Notes payable
Accounts payable
Accrued liabilities
Other current liabilities
Total current liabilities
Long-term debt
2002
63.7\%
138.2\%
90.0\%
73.3\%
97.6\%
92.1\%
79.1\%
63.9\%
22.7\%
84.0\%
2001
151.0\%
334.6\%
40.4\%
38.1\%
77.8\%
93.6\%
67.7\%
21.7\%
26.8\%
71.9\%
2000
42.9\%
62.2\%
84.4\%
164.1\%
151.9\%
84.1\%
120.4\%
319.2\%
178.7\%
105.0\%
1999
96.5\%
132.3\%
115.8\%
115.0\%
296.6\%
121.1\%
140.8\%
80.0\%
686.6\%
136.9\%
1998
100\%
100\%
100\%
100\%
100\%
100\%
100\%
100\%
100\%
100\%
81.8\%
77.8\%
88.1\%
82.0\%
0.0\%
0.0\%
43.4\%
84.4\%
116.3\%
70.3\%
0.0\%
0.0\%
87.3\%
91.3\%
95.7\%
90.1\%
0.0\%
0.0\%
125.2\%
146.7\%
106.0\%
126.7\%
0.0\%
0.0\%
100.0\%
100.0\%
100.0\%
100.0\%
100.0\%
0.0\%
Other liabilities
Total liabilities
Common stock
Additional paid-in-capital
Retained earnings
Other equity adjustments
Total shareholders equity
Total liabilities and shareholders equity
88.7\%
100.0\%
100.1\%
49.8\%
0.0\%
79.7\%
84.0\%
80.3\%
100.0\%
98.7\%
37.3\%
0.0\%
65.8\%
72.0\%
91.4\%
100.0\%
112.9\%
117.1\%
0.0\%
118.0\%
105.0\%
Table 18: Gateway Horizontal Common Size Blanace Sheets
125.4\%
150.0\%
180.0\%
143.5\%
0.0\%
150.0\%
136.9\%
100.0\%
100.0\%
100.0\%
100.0\%
0.0\%
100.0\%
100.0\%
Gateway, Inc.
Liquidity Ratios
Working capital
Working capital ratio
Quick ratio
Inventory turnover
Days in inventory
Accounts receivable turnover
Days in accounts receivable
Inventory conversion cycle
Accounts payable turnover
Days in accounts payable
Net cash conversion cycle
Cash + short-term investments
A/R*days in accounts receivable
Inventory*days in inventory
Product dollar days
Current assets-other current assets
Liquidity index
$
2002
996.00 $
1.95
1.27
34.66
10.53
19.96
18.29
28.82
11.63
31.39
(2.57)
1116.50
3822.48
1095.10
6034.08
1429.50
4.22
2001
807.00 $
1.58
0.92
24.10
15.15
15.90
22.96
38.11
9.31
39.21
(1.10)
890.00
8783.19
3294.56
12967.75
1490.00
8.70
2000
761.50 $
1.44
0.91
29.75
12.27
16.12
22.64
34.91
8.96
40.75
(5.84)
975.50
13481.55
3110.01
17567.07
1824.50
9.63
1999
843.00
1.52
1.19
39.71
9.19
14.89
24.51
33.70
8.82
41.40
(7.70)
1332.00
14754.88
1649.89
17736.76
2113.50
8.39
Table 19: Gateway Liquidity Rations
Gateway, Inc.
Cash Flow Ratios
Cash flow adequacy
Reinvestment ratio
Long-term debt repayment
Dividend payout
Free cash flow
Depreciation impact ratio
Recapitalization index
Cash flow return on assets
Cash flow return on sales
2002
0.34
3.12
2001
(1.33)
(0.74)
(0.01)
2000
0.89
1.09
0.03
(0.20)
48.00
(6.36)
(0.49)
(0.01)
(0.01)
(473.00)
(0.74)
1.00
(0.08)
(0.04)
(35.00)
0.65
1.67
0.07
0.03
387.00
0.18
2.52
0.21
0.08
2000
2.510\%
2.368
1.844
5.94\%
10.96\%
1999
4.774\%
2.619
2.036
12.51\%
25.46\%

1999
2.13
0.46
0.01
Table 20: Gateway Cash Flow Ratios
Gateway, Inc.
Asset Utilization Ratios
Profit margin
Asset turnover
Financial structure leverage
Return on assets
Return on equity
2002
-7.408\%
1.518
1.954
-11.24\%
-21.98\%
2001
-17.007\%
1.703
1.810
-28.96\%
-52.42\%
Table 21: Gateway Asset Utilization Ratios
Gateway, Inc.
Capital Structure Ratios
Debt to capital
Debt to equity
Long-term debt to capital
Long-term debt to equity
Working capital/total assets-Z1
Retained earnings/totalassets-Z2
EBIT/total assets-Z3
Sales/total assets-Z4
Market to book-Z5
Z-Score
2002
0.49
0.95
0.11
0.21
0.43
0.24
(0.61)
1.52
0.94
2.52
2001
0.45
0.81
0.06
0.11
0.27
0.44
1.09
1.70
1.72
5.23
Table 22: Gateway Capitilization Structure Ratios
2000
0.46
0.84
0.03
0.06
0.23
0.53
0.42
2.37
4.70
8.24
1999
0.51
1.04
0.04
0.07
0.30
0.49
0.57
2.62
8.00
11.98

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