Apple - Dell Analysis

Dell (DELL) Analysis – At the close of ’07 (results reported in January of ’08), Dell had an outstanding ROE of 76.97%; however things started to change in ’08-‘09 when ROE dropped down to 58.02%. This was caused by a decrease in Net Income which reduced the profit margin, as well as a decrease in Total Assets which reduced the equity multiplier. Due to further decrease in Net Income (58% decline) in ’09, the profit margin was cut in half. At the same time the sales decreased from $61,101 to $ 52,902 decreasing the turnover ratio by 66% (from 2.306 to 1.572). Both of these factors caused the biggest drop in ROE: it went from 58.02% in ’08 to 25.40% in ’09. ROE began to slowly climb back up in ’10 reaching 33.93%, as Net Income started to increase thus increasing the profit margin as well as an increase in sales increasing the turnover ratio; However the improvement rate has been only a few points per year and it might take them some time before they go back to their previous ROE level.
There is a direct correlation between the ROE and the profit Margin ratio: for the years the ROE was decreasing, profit margin ratio was following in the same direction (see ’08 and ’09). Just as ROE started increasing in ’10 and ’11, the profit margin ratio began increasing as well.
There is no direct correlation between Dell’s MVA and annual ROE. There doesn’t seem to be a trend. For example ROE was on a decline from ’07 through ’09, after which it started to rise again. On the other hand, MVA decreased in ’08 but increased in ’09, decreased in ’10 and increased back up in ‘11.
APPLE (APPL) Analysis –
DuPont Return on Equity (ROE)
In total Apple increased its ROE by 9.77% over 2007-2011. This was led by a steady increase in profit margin. The turnover ratio fluctuated from year to year however the variance was minimal. The equity multiplier steadily decreased. The increase in profit margin was high enough to absorb the decreases in equity multiplier and sustain and