Lucent Technologies Case Essay Example | Topics and Well Written Essays - 500 words

Lucent Technologies Case - Essay Example In this context, multiple factors can be held liable that had been accountable for getting subjected to this setback. Within these identified factors, the profitability of the company along with the equity multiples are the major deterrents. Apart from these two, the asset turnover had also contributed within this ROE fall (Tagliani, 2009). From the above tables, it can be clearly observed that the asset turnover rate dropped down subsequently from 35.25% in 1998 to 25.64% in 2000. As a result, a drop in the level of ROE and Return on Assets (ROA) can also be estimated. Apart from all these, the company business functionality also appeared to have boosted the long-term debt aspect that in turn had negatively impacted the overall financial stability of Lucent Technologies. In a cause and effect manner, the company’s liquidity went down by drastic levels and thus, resulted in deteriorating the performance of the company in the years 1998, 1999 and 2000 (Palepu & Healy, 2007). Lucent Technologies appeared to have made drastic changes within a very short tenure. With the prime intention of attracting more and more investors, the company made significant amount of efforts towards making its annual statements more transparent and understandable. The table below projects a clear understanding of the types of changes identified in Sales, Accounts Receivable, Inventory and Gross Margin for the five quarterly periods i.e. from December 1998 to December 1999. From the above table, improvement in the sales figures of the company can be indentified during the quarter of March-June 1999 by 12 %. Although, the company attained a growth rate for the consecutive two quarters after the quarter of Dec’1998 to March’1999, but could not retain the growth pace in a sustainable manner. The percentage rate of receivables for the company also dropped subsequently. In term of inventory, it