Accrual and Cash Based Measurement of Success The information below is extracted from the 2001 annual reports of three personal computer companies.
|
Compaq |
Apple |
Dell |
||||
|
(In millions) |
2001 |
2000 |
2001 |
2000 |
2001 |
2000 |
|
Sales |
$33,554 |
$42,222 |
$5,363 |
$7,983 |
$31,168 |
$31,888 |
|
Net income (loss) |
785 |
569 |
25 |
786 |
1,246 |
2,177 |
|
Total assets |
23,689 |
24,856 |
6,021 |
6,803 |
13,535 |
13,670 |
|
Operating cash flow |
1,482 |
565 |
185 |
868 |
3,797 |
4,195 |
Required Use appropriate analytical tools, including ratios, to answer the following questions.
A. Which company is most successful at generating net income from its assets?
B. Does this greater success result from the company using its assets more effectively to generate sales or from its generating greater profit from its sales? How do the profit margins compare?
C. Which company is most successful at generating cash flow from its assets?