Financial Analysis of Apple Inc and Dell Inc - Essay Example

Whereas Dell Inc. has disclosed its accounts liabilities relating to Lease Commitments, Purchase Obligations, Allowances for legal matters, Security litigations, Penalties, and Hedges (Dell Inc.).

            These defined liabilities are the results of the past events that will be turning into future economic outflows from the company, these liabilities successfully meet the standard definition of obligation but their measurement and computation are often observed to be a debatable issue. As the above-discussed liabilities are future expenses for the company, their future value computation may depend upon numerous factors. These liabilities are very sensitive to the rates of interest of the country and other external factors such as government policies, inflation rates, time value of money, and the probable date of maturity. Their date of maturity may change and solely depends upon the clauses and covenants placed upon them in the contracts.

            The lease commitments are the future payments of the leased item. Only the current liability under the lease agreement contains a true value of the lease payment for the year, the non-current liabilities hold an estimated figure to be paid in the future. The purchase obligation makes an organization bound into a commitment of purchase of an item in the future date. The market value of the item in the future cannot be defined in the present period; an estimated value is considered in this case as well. In the case of marketable securities, the rates and maturity periods, and markets for the item are estimated based on assumptions. The derivatives also fall into the same category. The nature of these obligations makes it difficult for the company to reflect and present the real and accurate value of these items. Hence, there is a possibility that the liabilities been shown by the companies may differ from their actual worth.

Auditors Opinion

Ernst & Young LLP is the audit firm that performs an external audit of Apple Inc. and PriceWaterhouseCoopers performs an external audit of Dell Inc. The auditors of both companies including Apple Inc. and Dell Inc. have declared in their respective audit reports that the financial statements and other operations of the company are presenting a true and fair view in major or all material aspects. The annual reports and the financial statements are providing the fairest and true view of accounts to the shareholders that can be regarded as a reliable one. Due to the applications of assumptions, records cannot be declared as falsified and accounts cannot be challenged. The assumptions and estimations are made taking the help of audit and management experts that are generally trained and experienced actuaries, in order to provide reasonable assurance to the ultimate users of the financial statements (Apple Inc.; Dell Inc.).