Dell's Working Capital

Richard S. Ruback; Aldo  Sesia

Case | HBS Case Collection | August 2000 (Revised December 2003)

Dell's Working Capital

Abstract

Dell Computer Corp. manufactures, sells, and services personal computers. The company markets its computers directly to its customers and builds computers after receiving a customer order. This build-to-order model enables Dell to have much smaller investment in working capital than its competitors. It also enables Dell to more fully enjoy the benefits of reduction in component prices and to introduce new products more quickly. Dell has grown quickly and has been able to finance that growth internally by its efficient use of working capital and its profitability. This case highlights the importance of working capital management in a rapidly growing firm.

Keywords: Financial Management; Working Capital; Manufacturing Industry; Computer Industry;

Language: English

Format: Print

6 pages

Educators Purchase

Citation:

Ruback, Richard S., and Aldo Sesia. "Dell's Working Capital." Harvard Business School Case 201-029, August 2000. (Revised December 2003.)

ALAC was a small importer of specialty industrial chemicals. The case explores the different financing alternatives to facilitate the company's explosive growth in working capital. At the end of 2009, the company was awarded the United States distributorship for the specialty chemical di-isononyl phthalate (DINP) from a large Taiwanese producer and had almost tripled its sales in 2010. It expected to double its sales in 2011 and to dramatically increase its profits. ALAC critically needed to obtain financing for the explosive growth in its inventory and accounts receivable balances.

Nashton Partners was a search fund founded by two HBS MBA's that raised $500,000 to finance a search for a company that they could purchase and then run for the next five to ten years. The case examines the search fund structure, the two-year search, and two potential acquisitions.

Faculty & Research

Dell's Working Capital

Abstract

Citation:

About the Author

More from the Author