Lucent Technologies, Inc., was formed from AT&T's Bell Laboratories researchorganization after the breakup of AT&T into the Baby Bells. Lucent designs,develops, and manufactures communication systems, supplying these systemsto most of the world's telecom operators for both wired and wireless servicesfor voice, data, and video delivery. In 1999 Lucent reported $38.301 billion inrevenues, against $31.806 billion in 1998 and $27.611 billion in 1997. Analystshave complained about the quality of Lucent's reported earnings over theyears.A. What questions arise regarding the quality of Lucent's earnings for 1997,1998, and 1999 from the partial cash flow statements in Exhibit 18.5? EXHIBIT 18.5Partial Consolidated Statements of Cash Flows(dollars in millions)Year Ended September 30199919981997Operating activitiesNet income$4,766$1,035$ 449Adjustments to reconcile net income to netcash (used in) provided by operating activities,net of effects from acquisitions of businessesCumulative effect of accounting changeBusiness restructuring reversalAsset impairment and other chargesDepreciation and amortizationProvision for uncollectibles(1,308)(141)236(100)(201)811,806751,4111491,499136Tax benefit from stock optionsDeferred income taxes88(21)1,2553672711,02656Purchased in-process research and developmentAdjustment to conform Ascend and Kenan's fiscal yearsIncrease in receivables-net151,683169(3,183)(1,612)(2,161)(403)Increase in inventories and contracts in processIncrease (decrease) in accounts payableChanges in other operating assets and liabilitiesOther adjustments for noncash items-netNet cash (used in) provided by operating activities(484)(316)(18)(397)668231(2,320)(840)$ (276)155(467)$1,86058$2,129

In this question, we will explain about the quality of Lucent Earnings of 1997,1998 and 1999 from…

Lucent Technologies, Inc., was formed from AT&T's Bell Laboratories research organization after the breakup of AT&T into the Baby Bells. Lucent designs, develops, and manufactures communication systems, supplying these systems to most of the world's telecom operators for both wired and wireless services for voice, data, and video delivery. In 1999 Lucent reported $38.301 billion in revenues, against $31.806 billion in 1998 and $27.611 billion in 1997. Analysts have complained about the quality of Lucent's reported earnings over the years. A. What questions arise regarding the quality of Lucent's earnings for 1997, 1998, and 1999 from the partial cash flow statements in Exhibit 18.5?

Lucent Technologies, Inc., was formed from AT&T's Bell Laboratories research organization after the breakup of AT&T into the Baby Bells. Lucent designs, develops, and manufactures communication systems, supplying these systems to most of the world's telecom operators for both wired and wireless services for voice, data, and video delivery. In 1999 Lucent reported $38.301 billion in revenues, against $31.806 billion in 1998 and $27.611 billion in 1997. Analysts have complained about the quality of Lucent's reported earnings over the years. A. What questions arise regarding the quality of Lucent's earnings for 1997, 1998, and 1999 from the partial cash flow statements in Exhibit 18.5?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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