Lucent Technology Case
Lucent Technologies Case Yulissa T. Ortiz Salgado March 30, 2013 Financial Reporting: Peeking Under the Financial Hood Mrs. Darcie Sargent The Lucent Technologies is a company that helps creating new revenue generating opportunities for customers through the communication service.
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We all know how useful and important communication services have become throughout the years. Lucent Technologies is compounded of three organizations around the products and they are: Integrated Network Solutions, Mobility Solutions and Lucent Worldwide Services.
Integrated Network Solutions also known as “INS” provides a service related to voice networking like voice messages, data and network management. Mobility offers software and wireless equipment to support radio like we do it on a car, and other electronic devices; however, all these equipment requires money to keep it running and to maintain it, so economy plays a very important place on this company like in every other. It is mentioned in the reading that throughout the years the economy was affected and the revenues or earnings as well.
In 2003, the balance sheet shows a balance of total assets of 15,911. Also, it shows a debt of 19,282. We see that there is no earning but a loss in the balance sheet. On 2003 the loss shown is 4,239. Besides the economy downs and cons we can see that one year after, on 2004 things started to get better financially talking. It is not a big difference, but we can see it is helping the company to hang in there. The asset’s balance shows a 16,963, 1,052 more than the year before. The liabilities went down from 19,282 to 18,342.
Also, the loss has decrease, by going up from (4,239) to (1,379). For this company would be hard to find investors because of the financial deficit they are confronting. The liabilities are way bigger than the earnings, because there are no earnings at all. If I were an investor, I would not put my money on a company that I see it’s not generating any money. It is true that the liabilities are decreasing, but in a real slowly way. Possibly if the liability was the same, but the earnings were about the same amount would be different.
If I were an investor, I would also like to look at the Statement of Cash flows of the company to see where the money is exactly being spent on and were the money is also coming from. When a company is showing this kind of deficit it is very important as an investor to be able to determine why this is happening. The financial statements definitely provide the complete information needed to find out that information. Going deeper into the loans and the liabilities information would also help to determine how we could lower the debt to help the company run in a better way.
Finally, I think I would just like to see all financial statements to determine how could my investment help in a positive way the company and also the company help me financially with the time. Usually we do not expect a company to generate lots of money right away, but we do expect to live from it after a while. Therefore, it is needed to understand the strengths and weaknesses of the company and financial statements are the perfect tools to find all that information. Reference: Understanding Financial Statements, Eight Edition, by Lyn M. Fraser and Aileen Omiston. Published by Prentice Hall, 2007.