Financial Management Principles Essay Example | Topics and Well Written Essays - 500 words

Financial Management Principles - Essay Example As an international player, the company is also very aggressive in pursuing strategies to capture rapidly developing economies in Europe and Asia. As an investor, I believe that an investment in Dell will yield substantial profit. Its leadership position in the global information technology (IT) industry makes it very attractive to investors. The unique and innovative business model of Dell which eliminates wastage and significantly increases production efficiency gives it strong brand equity. This good reputation significantly bids up the price of its stock. Dell's efficiency contributes to profitability. Dell's stock is a good investment as reflected on its various financial ratios. Table 1 shows the financial ratios of Dell which is divided in four groups-profitability, leverage, activity, and efficiency. Based on Table 1, Dell shows superior profitability. The company's return on equity is 86.5 % which reveals that every dollar invested in the firm's stock will yields $.856 cents within a year. The company also generates a return on asset of 15.5% while gross margin accounts for 18.2% of the entire revenue. The company's profitability ratios reflect its efficient cost management. Dell is recognized as one of the most efficient companies in the IT industry.