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

See similar textbooks

Similar questions

Sunland Co. is a full-service manufacturer of surveillance equipment. Customers can purchase any combination of equipment, installation services, and training as part of Sunland's security services. Thus, each of these performance obligations are separate with individual standalone selling prices. Sandhill Inc. purchased cameras, installation, and training at a total price of $84,000. Estimated standalone selling prices of the equipment, installation, and training are $94,500, $7,350, and $3,150, respectively. How should the transaction price be allocated to the equipment, installation, and training? Equipment $ Installation $ Training $
Salamander Inc. is a food processing company that operates divisions in three major lines of food products: cereals, frozen fish, and candy. On 13 September 20X1, the Board of Directors voted to put the candy division up for sale. The candy division's operating results had been declining for the past several years due to intense competition from large international players such as Nestlé and Cadbury. The Board hired the consulting firm Atelier LLP to conduct a search for potential buyers. The consulting fee was to be 5% of the value of any sale transaction. By 31 December 20X1, Atelier had found a highly interested buyer for the candy division, and serious negotiations were underway. The buyer was a food conglomerate based in Brazil; it offered $6.1 million cash. On 25 February 20X2, after further negotiations, the Salamander's board accepted an enhanced Brazilian offer to buy the division for $6.4 million. The Salamander shareholders approved the sale on 5 March 20X2. The transfer of…
Bridgewater Associates invests $88 billion in each of Lucid Group, Inc. (LCID) and Tesla, Inc. (TSLA). Bridgewater has a “2 and 15” fee structure and its management fees and incentive fees are calculated independently at the end of each year. After one year, the investment in LCID is valued at $110 billion and the investment in TSLA is valued at $120 billion. The annual return to an investor in Bridgewater Associates is closest to A. 30.88%. B. 27.65%. C. 23.47%. D. 18.75%.
N10. Account
In this assignment, you have been brought in to assess whether Nucor should be the first adopter of a new technology. This requires a $340 million investment in a commercially unproven technology. If successful, Nucor can expand into the flat sheet segment that was previously a segment where only the large integrated steelmakers competed. This assignment requires that you combine qualitative information (e.g., industry and firm insights) with quantitative analysis in Excel (discounted cash flow analysis). After you read the case, answer both questions: background analysis and cash flow analysis. For cash flow analysis, you need to do calculations using Excel file attached in the assignment on Blackboard. Once you finished your calculations using Excel file, you can answer your second part of the assignment. Background Analysis (20 points) Industry: Of the three groups of steelmakers, what are some of the differences between integrated steelmakers and minimill steelmakers? Nucor: What…
Whitehill Chemicals has two operating divisions. Its Formulation Division in the United States mixes, processes, and tests basic chemicals, and then ships them to Ireland, where the company's Commercial Division uses the chemicals to produce and sell various products. Operating expenses amount to $26.6 million in the U.S. and $78.6 million in Ireland exclusive of the costs of any goods transferred from the U.S. Revenues in Ireland are $201 million. If the chemicals were purchased from one of the company's Irish mixing divisions, the costs would be $39.6 million. However, if it had been purchased from an independent U.S. supplier, the cost would be $52.6 million. The marginal income tax rate is 20 percent in the U.S. and 12 percent in Ireland. Required: What is the company's total tax liability to both jurisdictions for each of the two alternative transfer pricing scenarios ($39.6 million and $52.6 million)? Note: Enter your answers in dollars and not in millions of dollars. Total tax…
Federated Manufacturing Incorporated (FMl) produces electronic components in three divisions: industrial, commercial, and consumer products. The commercial products division annually purchases 10,000 units of part 23-6711, which the industrial division produces for use in manufacturing one of its own products. The commercial division is growing rapidly; it is expanding its production and now wants to increase its purchases of part 23-6711 to 15,000 units per year. The problem is that the industrial division is at full capacity. No new investment in the industrial division has been made for some years because top management sees little future growth in its products, so its capacity is unlikely to increase soon. The commercial division can buy part 23-6711 from Advanced Micro Incorporated or from Admiral Electric, a customer of the industrial division now purchasing 650 units of part 88-461. The industrial division's sales to Admiral would not be affected by the commercial division's…
NGD Corp, a publically traded company, is a manufacturer of electrical supplies. Its main headquarters is based in Salt Lake City, Utah, and the company has been operating since 1977. The company sells its products to the retail market on a world-wide basis. Its major clientele is Home Depot and Lowes and has captured about 10 percent of the world market of light bulbs sales. Their financial statements presented below, for the Year Ending December 31, 2019, have been prepared using US GAAP. The controller would like to begin to see the effects of using IFRS on the Income Statement and Balance Sheet and you has been assigned to help with this task. The company would like to adapt IFRS by as early as next year as it is considering a new stock issue in the London Stock Exchange, which requires IFRS compliance. ADDITIONAL INFORMATION 1. NGD Corp. uses the LIFO method to account for its inventory. The LIFO reserve was $30,000 at the beginning of the year and $40,000 as of year-end. 2.…
CHS is a large multidivision firm. One division, Health Services, is well known Inside CHS for its efficient Information technology (IT). A smaller division, Optics, has approached Health Services with a proposal that it provide IT support in the form of machine time for some of Optics's billing and administrative work. After an analysis of the demands that Optics would place on the system, the IT manager of Health Services notes that Health Services would have to lease a new server because of the additional load. The lease rates for the current server are a fixed annual lease of $3,280 and it averages machine time of 2,900 hours annually. The new server leases for an annual rate of $5,040. Because the new server is a faster machine, Health Services can complete its current requirements In only 2,040 hours. The work for Optics is estimated to be 1,110 hours. In addition to leasing a new server, there are two other changes Health Services would have to make in IT. First, it will have to…
Birdie Golf, Inc., has been in merger talks with Hybrid Golf Company for the past six months. After several rounds of negotiations, the offer under discussion is a cash offer of $352 million for Hybrid Golf. Both companies have niche markets in the golf club industry, and the companies believe a merger will result in significant synergies due to economies of scale in manufacturing and marketing, as well as significant savings in general and administrative expenses. Bryce Bichon, the financial officer for Birdie, has been instrumental in the merger negotiations. Bryce has prepared the following pro forma financial statements for Hybrid Golf assuming the merger takes place. The financial statements include all synergistic benefits from the merger: 2019 2020 2021 2022 2023 Sales $409,600,000 $460,800,000 $512,000,000 $576,000,000 $640,000,000 Production costs 287,400,000 332,500,000 358,400,000 404,500,000 451,200,000 Depreciation…