LUCENT TECHNOLOGIES CASE ACC/230 January 7, 2011 Eddie Mattison LUCENT TECHNOLOGIES CASE After reading the Case Review of Lucent Technologies, it’s obvious that the assets of Lucent Technologies suffered a large decline between the years of 2003 and 2004. 49.4% of their total assets in 2003 consisted of their current assets, and in 2004 the percentage of their current assets decreased to 48.5%. Lucent Technologies total current assets increased from $7,863 in 2003 to $8,231in 2004. After a very thorough analysis, it is also obvious that the inventory of Lucent Technologies increased between the years of 2003 and 2004, because in 2003 the percentage of inventory was only 4% and it rose to 4.8% in 2004. In measuring the company’s cash and cash equivalent, it was clearly seen that their entire assets decreased by 24% in 2003 and almost 20% in 2004.
Analysis of Financial Position of Berry’s Bug Abstract The purpose it to analyze financial position of the company for the year ended 2008 as compared to year ended 2007. The techniques of horizontal, vertical and ratio analysis have been used for this purpose. Ratios Analysis The liquidity ratios shows that the company ability to pay off its current liabilities in the year 2008 is better than 2007. As current ratio increased by 2.42 and acid test ratio increased by 2.31 times in 2008 as compared to 2007. However, the account receivable turnover and inventory turnover ratios went down in 2008 as compared to 2007.
In 2006 the fixed cost was at its highest due to a new rent that was larger and more employees. The margin of safety, which is in exhibit 4, was already extremely low in 2003 at 15%. Then it was 6% in 2004 and 7% in 2006. It has decreased and obviously other things in the business need to change like sales per unit to increase it. The next question was if they decreased price by 105 and increased sale tickets to 14,000, if there income would increase.
Can we see why this ratio fell so sharply? Actually, it's not as bad as it seems. Turnover increased by 59% but fixed assets increased by 295% and current assets by 84%. Here we have one of those cases where a ratio is falling in value but the underlying changes might not be so bad. That is, the Carphone Warehouse has made major investments in its assets that have yet to generate their previous level of sales: 1.56 times versus 2.57 times.
An integral part in performing a horizontal analysis is the ability to see the variation from one period to the next which are called trends (Horizontal analysis, n.d.). . Within the income statement, net sales increased by 33.3%, $150k, from Year 6 to Year 7. Then, a drastic decrease of 15% which is roughly $900k, took place from Year 7 to Year 8. The 33% increase showed the strength of the company, but the huge drop in sales demonstrated how Competition Bikes, Inc. (CB) struggled to attain a surge in its revenue which is the result of the 15% decline in sales caused by economic situations.
Taking a further look, an analyst might have some concerns when looking over Kodak’s account payables and liabilities. There was a high increase in Kodak’s liabilities which pose concern for how well and willing is Kodak able in paying back its debt. Although Kodak’s total assets could cover its liabilities, the high increase in liabilities alone would cause some concern with analyst. Another important point analyst might use when they are assessing the profitability of Eastman Kodak is the substantial decrease in the company’s net income between 2002 and 2003. This alone will cause some concern and would pose analyst to research further the reasons for such decrease.
After December of 2003, both companies fell below S&P, and then increasing as the months continued on. FedEx was always above UPS. 3. How does the performance of each 4. How do you explain the variation of EVA relative to the stock value of each firm?
Rationale In the United States, the deep-discount warehouse industry has seen 25 years of rapid growth. However, domestic sales growth finally peaked in 2008 and ensued on a downwards trend in 2009, suggesting that perhaps the American market has been exhausted. Domestic market fatigue has been particularly tasking for Costco, resulting in the greatest sales percentage decline among the big 3 warehouse retailers. Costco’s sales plummeted over 1.5% in 2009 from its pinnacle in 2008. If historic trends are any indication of future performance, Costco must react proactively and remedy this matter immediately.
1993 94 95 96 Total liabilities 45% 68% 73% 72% / total assets Days payables 35 47 54 56 Current ratio 2.5 1.6 1.1 1.2 Clarkson Lumber Company position has weakened. Total liabilities as a % of assets increased considerably from 45% to 72%. Trade credit has been stretched from 35 days in 1993 to 56 days in 1996. Current ratio (CA/CL) has declined tremendously from 2.5 to 1.2. In addition, in the absence of improved profitability, continued sales growth will lead to a further weakening of Clarkson’s financial condition.
That balance slowly adjusted over the next 20 years due to reduced production. The price of gas peaked at the end of that cycle in 2008 at $12.69 /mmBtu (millions of British Thermal Units) based on the Henry Hub Natural Gas Front Month Futures (a standard for finding the pricing point of natural gas). However, because of the economic crisis and the emerging shale gas market, the price lowered to $6.50 between 2008 and 2010. The quickly expanding market increased supply so much that it hit a low price of $1.82/mmBtu in 2010. It has averaged $3.50/mmBtu in recent years due to new fracking technologies and government subsidies (McElroy, Lu, 2013).