Lucent Technologies Case Study

Analyzing the trends and changes found within Lucent Technologies there are many different aspects to recognize. The asset structure of Lucent Technologies is contributing to the company’s profit. From 2003 to 2004 Lucent Technologies increased their total assets. Lucent Technologies assets went from $7,863 (million) dollars to $8,231 (million) dollars. This shows a positive trend as the company keeps establishing their assets which could control the increase of profit. Next while analyzing the company’s decrease in total liabilities, the major contributing factors came from Accounts Payable, Short term debt (debt maturing within one year), and other current liabilities. Lucent Technologies discussed that they had to cut back on spending because of the market deterioration (Fraser, 2007, p. 79).The market deterioration generated from general economic slowdown, net-work overcapacity, customer bankruptcies, network build-out delays and limited availability of capital (Fraser, 2007, p. 79). Since Lucent Technologies have made cutbacks, the long-term debt has increased over the year. However, the total debt for the company since 2004 has decreased. Even though majority of companies that first form start off by owing money, it is most likely the cutbacks have influenced some of the debt in the company. But as long as the company can stay above water and increase their assets and profit, they should not get overwhelmed with debt and avoid bankruptcy. On a positive note, the company did increase in capital which may look good to investors. Investors and creditors may raise concerns with reviewing the information provided on the statements. In order to see an actual trend of the company they may want to refer to four years prior to the market deterioration. It would be important for investors and creditors to look at the red flags that stand out. Some important factors that they should look at is how the cash equivalents are decreasing, or could Lucent go bankrupt with