Deciphering Financial Statements (Hewlett Packard & Dell)
Review the 2004 balance sheet data for Hewlett Packard (HP) and Dell shown below.
|
(in millions) |
Hewlett Packard |
Dell |
|
Current assets |
$42,901 |
$16,897 |
|
Current liabilities |
28,588 |
14,136 |
|
Total liabilities |
38,574 |
16,730 |
|
Total stockholders’ equity |
37,564 |
6,485 |
|
Retained earnings |
15,649 |
9,174 |
1. Compute each company’s current ratio for 2004. Based on the result, which company appears to be more liquid?
2. Compute each company’s debt to equity ratio for 2004. Which company appears to have the most debt in relation to stockholders’ equity?
3. Which company has a larger amount of long term debt in its financing mix?
4. Why would HP have such a large amount in retained earnings at the end of 2004 relative to Dell?