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Lucent Technologies

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After reviewing the common size balance sheet, Lucent technologies has experienced an small increase in its total assets. Its cash and cash equivalent have decreased, while their inventory, receivables, and marketable securities have increased. This proves that they are taking in less cash and their products are not revolving as they should. The total assets went from $15,911 in 2003, to $16,963 in 2004. In this amount the balance sheet shows an increase in inventory and other total assets. The amount of inventory went from 632 in 2003 to 822 in 2004 and the other total assets went from 1213 in 2003 to 1813. This proves that the company has less products circulating and this is why the cash flow is declining. The company’s liabilities are increasing, which can put the company at a deficit since there is less money coming into the company.
Investors and creditors should be concerned about the decrease in the cash and cash equivalents, the increase in assets and liabilities, and increase in the inventory amounts. All of these factors will cause long term debt for the company. With the cash and cash equivalent decreasing and the assets increasing the company is losing money. The increase in the inventory shows the carrying cost for the company to be very high. If the company is unable to get the products to circulate they will lose any profits that were anticipated. They will also have to determine how much the new products will cost them. This also affects the cost of the company because they will have to invest in something without making any profit on the previous product. The investors and credits need to be concerned about the possible long term debt that may occur. Long term debt can become a major problem for the company, because they have had losses. If the company does not recover from the losses, it can take them many years to recover and actually see a

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