Lucent Technologies Essay

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Lucent Technologies Case By: Scarlett Gremard ACC 230 Professor: Craig Hanson After reading the Case Review and reviewing the common size balance sheet, Lucent Technologies has experienced a slight increase in total assets of $1052 from 2003 to 2004. The cash and cash equivalents has decreased from 24% in 2003 to 20% in 2004. Marketable securities had a slight increase from 4.3% in 2003 to 5.1% in 2004. Accounts Receivable has experienced a decrease from 9.5% to 8%. Inventory had a slight increase from 4% to 4.8% in 2004. The increase in accounts receivable shows an increase in credit sales. While the decrease in cash and cash equivalents and increase in marketable securities shows that Lucent is removing idle cash and investing to earn interest and cash inflows are declining. The increase in inventory shows their products are revolving as well as they should. Total current assets have declined from 49.4% to 48.5%. Property, plant, and equipment have also declined from 10% to 8.1%. Prepaid pension costs have increased from 29.3% to 31.6% meaning more employees are retired. Other current assets had a significant increase from 7.6% to 10.7%. The company has an increase in inventory and other total assets proving that products aren’t moving through the operating cycle as they should explaining the cash flow decrease and liabilities are increasing. The debt structure of Lucent Technologies was a slight decrease of $940 from 2003 to 2004. Accounts payable has a decrease from 6.7% to 5.1%. Payroll and benefit related liabilities increased from 6.8% to 7.3%. Total current liabilities significantly decreased from 31% to 26.3%. Long term debt had an increase from 27.9% to 28.5%. The equity structure has improved, but remains in the negative. The total shareholders’ deficit decreased from $4,239 in 2003 to $1,379 in 2004. Investors

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