Week 5 DQ

When Sprint (R ) and Nextel (R ) merged and formed Sprint Nextel Corp , they were burdened with debt . List two ways they were able to dramatically reduce their debt based on the article Getting the Drop on the Bad Guys and Bad Debt (2005

From 2001-2002 , the level of Nextel 's bad credit was so high that major changes had to be made if they were to remain profitable in the communications industry . Steps to improve their systems and policies were deemed necessary to maintain the company 's health

Since a large part

of the debt comes from fraudsters , Nextel 's first course of action was to impose a tighter policy regarding credit card transactions - they now require 2 identifiers when the credit card one wants to make transactions with cannot be inspected in person . Within five months , this system has resulted in a significant drop in credit card fraud

Next , Nextel worked on streamlining its processes and consolidating its various systems , particularly the billing and collection system - the new scheme eliminated redundant and time-consuming processes that workers had to put up with in the past . To ensure that the new system works properly and is utilized to its optimum potential , employees from the customer finance services were used to design , use , and give feedback on the system . The new system also includes Nextel 's implementation of a one-call resolution scheme , wherein the customer 's concern or problem is resolved in a single phone call . Employees were tasked to quickly identify and solve problems that might be causing customers not to pay

By the time they merged with Sprint , Nextel has successfully and dramatically reduced this debt to from 4 .7 to around 1 . As a result of all the implemented changes , productivity increased up to 30 , fewer customers are inclined to severe ties with the company , and Nextel 's overall cost and capital structure improved

According to Morris (2005 ) article , what is common stock and what rights do the owners of common stock have

Common stock is , as implied by the name , the most common form of stock held in a company . Common stock ' refers to the millions or billions of shares that are available to the general public . Owners of common stock have some voting rights in corporate decisions , although the rights of owners of stock typically hold priority . In case of company liquidation , owners of common stock are last in line to collect their portion of any remaining assets after bondholders stockholders , and other debt holders have been paid . Common stock owners are also entitled to a share in company profits through dividends and capital appreciation . However , dividends paid to the stockholders must be paid to shares before being paid to common stock shareholders

Common stock can be categorized into different types , although all types have several aspects in common such as their owners having voting rights , potential benefits to owners (e .g . quarterly dividends and increasing market prices , and also the risk of loss...