Assignment: Read Case 2.1: Lucent Technologies on pp. 79 and 80 (Ch. 2) of the text.
Compose a 500- to 750-word paper that includes your answers to questions 2-4 on p. 79. Question #2: Evalutat the asset, debt, and equity structure of Lucent Technologies, as well as trends and changes found on the common-size balance sheet.
After reviewing the case of Lucent Technologies, we discover that the assets for Lucent Technologies suffered a decline between 2003 and 2004. According to the information provided in the case revealing, the current assets in 2003 was 49.4% of Lucent Technologies total assets, whereas the current assets in 2004 decreased to 48.5%. Although, after reviewing the case the percentage of inventory rose from 4.0% in 2003 to 4.8% in 2004. We can then calculate there is about a 20% increase in the total inventory holdings. Also it is apparent that Lucent Technologies entire assets in 2003 was 24% and had a decrease in 2004 to about 20%. This can be measured by the company's cash equivalents and cash.
The total debt structure of Lucent Technologies decreased between 2003 and 2004. Lucent Technologies had a decrease in their current liability. In 2003 their current liability was 25.6% and decreased to 24.3% during 2004. According to the debts that increased from 23% in 2003 to 26.4% a year later in the company's total liability, the debts of Lucent Technologies would be considered long term. In 2003, Lucent Technologies had decreased in the representation of total liabilities and shareholders equity on the equity side for Lucent Technologies when compared to a year later. Improvements can happen and the situation of the company now can improve as the year progresses so the company won't look deficit.
Question #3: What concerns would investors and creditors have based on only this information?
Based on only this information for Lucent Technologies, a concern investors and...