Dell Computer Corporation (DELL) has long been recognized for its innovative approach to managing its working capital. Describe how Dell pioneered the management of net working capital to free up resources in the firm.

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Answer 1

Textbook Question

Chapter 15, Problem 1RQ

Dell Computer Corporation (DELL) has long been recognized for its innovative approach to managing its working capital. Describe how Dell pioneered the management of net working capital to free up resources in the firm.

Expert Solution & Answer

Summary Introduction

To discuss: The ways Company D pioneered the management of net working capital to free up the resources in an organization.

Explanation of Solution

Company D pioneered the build-to-order model in the computer hardware industry. PCs would not be manufactured in advance and stored in warehouses. Instead a PC would be installed only after a customer has placed an order. This led to a very low inventory, which reduced the cost of carrying.

Carrying cost of raw materials was also reduced due to very low inventory of raw materials.

Obsolesce of raw materials has also been minimized and the loss of older raw materials has been kept to a minimum with the advent of new technology.

Days sales inventory (DSI) was low, and Days receivables was very low because the PC would only be installed after the customer paid for it.

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Answer 2

Textbook Question

Chapter 15, Problem 1RQ

Dell Computer Corporation (DELL) has long been recognized for its innovative approach to managing its working capital. Describe how Dell pioneered the management of net working capital to free up resources in the firm.

Expert Solution & Answer

Summary Introduction

To discuss: The ways Company D pioneered the management of net working capital to free up the resources in an organization.

Explanation of Solution

Company D pioneered the build-to-order model in the computer hardware industry. PCs would not be manufactured in advance and stored in warehouses. Instead a PC would be installed only after a customer has placed an order. This led to a very low inventory, which reduced the cost of carrying.

Carrying cost of raw materials was also reduced due to very low inventory of raw materials.

Obsolesce of raw materials has also been minimized and the loss of older raw materials has been kept to a minimum with the advent of new technology.

Days sales inventory (DSI) was low, and Days receivables was very low because the PC would only be installed after the customer paid for it.

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Answer 3

Textbook Question

Chapter 15, Problem 1RQ

Dell Computer Corporation (DELL) has long been recognized for its innovative approach to managing its working capital. Describe how Dell pioneered the management of net working capital to free up resources in the firm.

Expert Solution & Answer

Summary Introduction

To discuss: The ways Company D pioneered the management of net working capital to free up the resources in an organization.

Explanation of Solution

Company D pioneered the build-to-order model in the computer hardware industry. PCs would not be manufactured in advance and stored in warehouses. Instead a PC would be installed only after a customer has placed an order. This led to a very low inventory, which reduced the cost of carrying.

Carrying cost of raw materials was also reduced due to very low inventory of raw materials.

Obsolesce of raw materials has also been minimized and the loss of older raw materials has been kept to a minimum with the advent of new technology.

Days sales inventory (DSI) was low, and Days receivables was very low because the PC would only be installed after the customer paid for it.

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Answer 4

Textbook Question

Chapter 15, Problem 1RQ

Dell Computer Corporation (DELL) has long been recognized for its innovative approach to managing its working capital. Describe how Dell pioneered the management of net working capital to free up resources in the firm.

Expert Solution & Answer

Summary Introduction

To discuss: The ways Company D pioneered the management of net working capital to free up the resources in an organization.

Explanation of Solution

Company D pioneered the build-to-order model in the computer hardware industry. PCs would not be manufactured in advance and stored in warehouses. Instead a PC would be installed only after a customer has placed an order. This led to a very low inventory, which reduced the cost of carrying.

Carrying cost of raw materials was also reduced due to very low inventory of raw materials.

Obsolesce of raw materials has also been minimized and the loss of older raw materials has been kept to a minimum with the advent of new technology.

Days sales inventory (DSI) was low, and Days receivables was very low because the PC would only be installed after the customer paid for it.

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Answer 5

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Answer 6

Textbook Question

Answer 7

Expert Solution & Answer

Summary Introduction

To discuss: The ways Company D pioneered the management of net working capital to free up the resources in an organization.

Explanation of Solution

Company D pioneered the build-to-order model in the computer hardware industry. PCs would not be manufactured in advance and stored in warehouses. Instead a PC would be installed only after a customer has placed an order. This led to a very low inventory, which reduced the cost of carrying.

Carrying cost of raw materials was also reduced due to very low inventory of raw materials.

Obsolesce of raw materials has also been minimized and the loss of older raw materials has been kept to a minimum with the advent of new technology.

Days sales inventory (DSI) was low, and Days receivables was very low because the PC would only be installed after the customer paid for it.

Answer 8

Expert Solution & Answer

Summary Introduction

To discuss: The ways Company D pioneered the management of net working capital to free up the resources in an organization.

Explanation of Solution

Company D pioneered the build-to-order model in the computer hardware industry. PCs would not be manufactured in advance and stored in warehouses. Instead a PC would be installed only after a customer has placed an order. This led to a very low inventory, which reduced the cost of carrying.

Carrying cost of raw materials was also reduced due to very low inventory of raw materials.

Obsolesce of raw materials has also been minimized and the loss of older raw materials has been kept to a minimum with the advent of new technology.

Days sales inventory (DSI) was low, and Days receivables was very low because the PC would only be installed after the customer paid for it.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Summary Introduction

To discuss: The ways Company D pioneered the management of net working capital to free up the resources in an organization.

Answer 12

Explanation of Solution

Company D pioneered the build-to-order model in the computer hardware industry. PCs would not be manufactured in advance and stored in warehouses. Instead a PC would be installed only after a customer has placed an order. This led to a very low inventory, which reduced the cost of carrying.

Carrying cost of raw materials was also reduced due to very low inventory of raw materials.

Obsolesce of raw materials has also been minimized and the loss of older raw materials has been kept to a minimum with the advent of new technology.

Days sales inventory (DSI) was low, and Days receivables was very low because the PC would only be installed after the customer paid for it.

Answer 13

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Dell Computer Corporation (DELL) has long been recognized for its innovative approach to managing its working capital. Describe how Dell pioneered the management of net working capital to free up resources in the firm.

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