Lucent Technologies Case
“Lucent technologies is a company that designs and delivers the systems, software and services that drives the next generation communications networks. They are backed by Bell Labs research and development” (Fraser & Ormiston, p 79, para 2). “They use their strengths in mobility, optical, access, data and voice networking technologies, as well as services, to create new revenue generating opportunities. This makes it possible to help them better manage their networks. Their customers include communication service providers, governments and enterprises worldwide” (Fraser & Ormiston, p 79, para 3).
Between 2003 and 2004 Lucent Technologies asset structure changed. After reviewing the common size balance sheet, Lucent Technologies has experienced a small increase in its total assets. Its cash and cash equivalent have decreased, while their inventory, receivables, and marketplace securities have increased. In 2003, 49.4% of all of the company’s assets made up the current assets of the company that year. In 2004, however, the current assets only made up for 48.5% of all of the company’s assets. However, inventory went up in this same period. In 2003 the inventory was at 4.0% and in 2004 it was at 4.8%. Lucent Technologies’ inventory holdings had a twenty percent increase and their cash and cash equivalents fell to 19.9% in 2004 from 24% of all the assets in 2003. Something else that fell during this two-year period was the debt structure of the company. The debt structure increased from 23% of all liabilities in 2003 to 26.4% of all liabilities in 2004. This is after the current liability decreased from 25.6% to 24.3% from 2003 to 2004. On a good note, the equity structure of the company did improve. Total liabilities and shareholder’s equity went from a negative 21% in 2003 to a negative 8% in 2004. The equity position is a deficit but it has improved somewhat from one year to the next.
Investors and creditors should be concerned about the
Between 2003 and 2004 Lucent Technologies asset structure changed. After reviewing the common size balance sheet, Lucent Technologies has experienced a small increase in its total assets. Its cash and cash equivalent have decreased, while their inventory, receivables, and marketplace securities have increased. In 2003, 49.4% of all of the company’s assets made up the current assets of the company that year. In 2004, however, the current assets only made up for 48.5% of all of the company’s assets. However, inventory went up in this same period. In 2003 the inventory was at 4.0% and in 2004 it was at 4.8%. Lucent Technologies’ inventory holdings had a twenty percent increase and their cash and cash equivalents fell to 19.9% in 2004 from 24% of all the assets in 2003. Something else that fell during this two-year period was the debt structure of the company. The debt structure increased from 23% of all liabilities in 2003 to 26.4% of all liabilities in 2004. This is after the current liability decreased from 25.6% to 24.3% from 2003 to 2004. On a good note, the equity structure of the company did improve. Total liabilities and shareholder’s equity went from a negative 21% in 2003 to a negative 8% in 2004. The equity position is a deficit but it has improved somewhat from one year to the next.
Investors and creditors should be concerned about the