Harvard Business School - Case study on Dell's Working Capital

9-201-029 REV: DECEMBER 15, 2003

Professor Richard Ruback and Research Associate Aldo Sesia prepared this case. HBS cases are developed solely as the basis for class discussion. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.

RICHARD RUBACK Dell's Working Capital Dell Computer Corporation had reported impressive growth for fiscal year 1996 with its sales up 52% over the prior year. Industry analysts anticipated the personal computer market to grow 20% annually over the next three years, and Michael Dell expected that his company, with its build-toorder manufacturing system, would continue its double-digit growth. Although Dell Computer had financed its recent growth internally, management needed a plan for financing the future growth. Company Background Dell Computer Corporation was founded in 1984 by then nineteen-year-old Michael Dell. The company designed, manufactured, sold and serviced high performance personal computers (PCs) compatible with industry standards. Initially, the company purchased IBM compatible personal computers, upgraded them, then sold the upgraded PCs directly to businesses by mail order.