Nextel Analysis
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Overall Nextel has increasingly become a stronger company. It has consistently increase gross profits over the last five years. When compared to its competitors average financial ratios of 2002 Nextel has done better in each of the categories under the profitability and liquidity ratios by a substantial margin. The company has to focus on improving its efficiency ratios. It is doing less than average in each category except for accounts receivable. The biggest discrepancy is in its inventory turnover. They should look for ways to increase this number. Some suggestions include promotions such as buy one get the second for half price. It is important to increase turnover in inventory because the longer a product is not sold the more it costs the company for storing that item in some building. Another area of concern is that Nextel has large long term debts totally over twelve billion dollars in December of 2002 but it ahs shown an improvement coming down two billion dollars from the previous year.
In key growth rates Nextel is doing very poorly compared to its competitors except for its operating profits which far exceed its competitors. Its operations are a large strength to the company. In the sales category it has decreased substantially from 1999 but so has the market. An increase in sales would mean an increase in inventory turnover, more customers, and ultimately more profits. Its percentage in long-term debt re-illustrates the importance of lessening its debt.
Nextel is in need of building a larger consumer base. This can be achieved by offering more promotions. They must realize that once a person purchases their phone plan the customer will most likely be a customer for life, granted they are satisfied with the services which they receive. So in the long run, promotions will increase their sales. Also, Nextel must focus on decreasing its debts. I assume most of it is from investing in new technologies. On possible