Financial Report and Recommendation for Sprint Nextel Corporation

To: CFO, HTC

Subject: Financial report and recommendation for Sprint Nextel Corporation

This document will consist of three parts. Part A will consist of an evaluation of Sprint Nextel Corporation’s, hereafter referred to as Sprint, financial performance for the period 2007, 2008, & 2009. Part B will consist of an evaluation of Sprint’s stock performance for the period 2007, 2008, & 2009. Part C will consist of my recommendation.

Part A

Financial strength and solvency are determined by liquidity and debt ratios. While Sprint is performing below the industry average of 2.1, with a current ratio of 1.27, they do have enough assets to cover their liabilities. Also, the acid-test ratio of 1.17 is at the industry average and indicates that Sprint continues to have enough current assets to meet current liabilities. They have little room for unexpected expense. Sprint’s debt ratio at 67.4% is just above the industry average at 63%, but they have maintained a consistent level over the last three years. The amount of current liabilities is well below the industry average at 18% of total assets.

Efficiency is measured by activity ratios. It is clear that Sprint has managed their inventory at an optimal level. Their inventory turnover is stable and the inventory to sales level is consistent and better than the industry average. However, Sprint’s sales are declining as indicated by reduced revenues in 2008 and 2009. This as lead to poor performance of most indicators that are denominated by sales.

Management efficiency is measured by profitability ratios. What is clear here is that Sprint is not making enough sales to meet their break-even point. Their net profit margin 9% below the industry average of 1.4% and their ROA is 9.2% below the industry average of 4.8%. These both result in negative percentages. On the positive side, both continue to make improvements even with reducing levels of sales.

Part B

Sprint’s large losses in late 2007...