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Evaluation of Lucent Technologies

Please see the attachment.

2. Evaluate the asset, debt, and equity structure of Lucent Technologies, as
well as trends and changes found on the common-size balance sheet.

3. What concerns would investors and creditors have based on only this

4. What additional financial and non-financial information would investors
and creditors need to make investing and lending decisions for Lucent Technologies?


Solution Preview

2. The asset structure of Lucent deteriorated between 2003 and 2004. The current assets of the company during 2003 constituted 49.4% of all assets. During 2004, this position declined to 48.5%. Inventories climbed from 4.0% in 2003 to 4.8% in 2004 (a twenty percent increase in inventory holdings). Cash and cash equivalents declined from 24% of all assets in 2003 to 19.9% during 2004.

The debt structure of the company declined as well between the two years as well. Although current liability position decreased from 25.6% in 2003 to 24.3% during 2004, the debt seems to have shifted to long term as this category increased from 23% of all ...

Solution Summary

The solution evaluates the financial statements of Lucent Technologies.