Enron Case Study - 5921 Words

Enron Case Study [pic] Part A: Problem Focused Analysis and Recommendations. 1. Brief Case Background. List key events, use timeline. Case Background At one time Enron was one of the world’s largest producers of natural gas, oil, and electricity. It also appeared to be one of the most profitable companies, taking shareholders from $19.10 in 1999 to $90.80 by the end of 2000. Enron’s top management answered to a Board of Directors whose responsibility was to question and challenge new partnerships, ventures, and decisions within the company. On several occasions, Andrew Fastow, the company’s Chief Financial Officer approached the board of directors with new investment partnerships which the board approved with very little†¦show more content†¦Lay died at the age of 64, in 2006. At the time of his death, the Securities and Exchange Commission was still trying to get $90 million in addition to civil fines. Skilling was indicted for securities and wire fraud and was convicted on 19 of 28 counts. He was sentenced to 24 years, 4 months in a federal prison. In addition he was ordered to pay $26 millio n out of pocket to restore the Enron pension fund. The result of Enron’s downfall contributed to the Sarbanes-Oxley Act (SOX) in 2002. This law contains stronger penalties for fraud and requires public companies to avoid making loans to management, report more information to the public, become more independent from their auditors, and to report on and have audited the financial internal control procedures. Now, in public companies, when a manager signs off on a financial document of any kind, they are held responsible for the credibility of that document and its contents. After Enron, several other companies were investigated for fraudulent financial behavior such as Adelphia Communications, Tyco International, and WorldCom. Enron Timeline 1999 Enron’s stock price is $19.10 2000 Enron’s stock price is $90.80 with revenues of $100.8 billion (up from $13.2 billion in 1996) February 2001 Jeffrey Skilling becomes president and CEO of Enron. †¢ Debt levels rise to $37.3 billion, a 91% increase over previous 12 month period. †¢ Share price falls toShow MoreRelatedENRON Case Study1572 Words   |  7 Pages1. The Enron debacle created what one public official reported was a â€Å"crisis of confidence† on the part of the public in the accounting profession. List the parties who you believe are most responsible for that crisis. Briefly justify each of your choices. Following parties are believed to be the most responsible for the crisis. With any big organization going so bad, the blame starts with the top level executives, there was no different in this case. For Enron the blame started with Enron’sRead MoreEnron Case Study2596 Words   |  11 PagesEnron a Case Study Enron, once known as the worldwide leader in energy trading, began as a natural gas pipeline company. â€Å"At its peak, Enron brokered up to 20 percent of America’s energy transactions. These included basic contracts to deliver natural gas from wells to pipelines for distribution to homes, contracts for the purchase of electrical power facility out port, and more complex financial contracts, which allowed power companies to manage price and market risk† (Ackman)Read MoreEnron Case Study4789 Words   |  20 PagesEXECUTIVE SUMMARY This report will analyse the groupthink’s concerns in the collapse of Enron. The collapse of Enron is less than three months, which Enron from a very prosperous company to a bankrupt enterprise. The collapse of Enron is one of the most grievous business failures in United States. This disastrous business failure had causes a large number of employees lost their jobs and retirement savings. Groupthink leads groups to make faulty judgments. Groupthink occurs when a group makeRead MoreEnron case study1195 Words   |  5 Pagesï » ¿Q 1: Evaluate Enron profit and cash flow performance during the period 1998 – 2000? Profitability Measures Enron’s reported net income grew from $703 million in 1998 to $979 million in 2000, totaling 35.1% profit growth for the three-year period. Enron was among the leading of â€Å"high performing† companies by sustaining a high earnings growth insight. However, as Table 1 indicates, Enron’s reported profits were microscopic relation to revenues. Net income did not grow at anything near the sameRead MoreEnron Case Study Analysis1699 Words   |  7 PagesBusiness Strategy Enron Case Study 09/08/12 Enron Case Study: From Company to Conspiracy 1. What is the History of Enron, and what current situation does it find itself in? Enron was created by a combination of companies. These companies were Houston Natural Gas and InterNorth. These companies were merged together in July 1985. CEO of Houston Natural Gas, Kenneth Lay became chairman and CEO of the combined company. This happened in February 1986. The company changed its name to Enron on April 10thRead MoreEnron Case Study Summary976 Words   |  4 PagesEnron Case Study The case of Enron is a fascinating one. United States is a country where auditing and accounting principles are so strong. How can something take place on such high level in the United States? The Enron case demonstrates the need to reform the accounting and corporate governance practices in the United States. Moreover, the Enron case made government officials to pay close attention to deregulated energy market. Some of the aspects that struck me are discussed below. One of theRead MoreEnron Case Study1472 Words   |  6 PagesQ 1: Evaluate Enron profit and cash flow performance during the period 1998 – 2000? Profitability Measures Enron’s reported net income grew from $703 million in 1998 to $979 million in 2000, totaling 35.1% profit growth for the three-year period. Enron was among the leading of â€Å"high performing† companies by sustaining a high earnings growth insight. However, as Table 1 indicates, Enron’s reported profits were microscopic relation to revenues. Net income did not grow at anything near the sameRead MoreEnron Tyco Case Studies2163 Words   |  9 PagesRunning head: CASE STUDIES: ENRON’S FALL AND TYCO INTERNATIONAL’S LEADERSHIP CRISIS Case Studies: Enron’s Fall and Tyco International’s Leadership Crisis Grand Canyon University BUS 604 November 4, 2009 Case Study: Enron’s Fall and Tyco International’s Leadership Crisis The tight Federal regulations now governing businesses and their accounting practices came about because one corporation, Enron, took risks their company could not withstand without taking some rather extreme measures inRead MoreEnron and Worldcom Case Study1225 Words   |  5 PagesEnron and WorldCom Case Study This report is based on the demise of Enron Corporation and WorldCom. Both the firms are demised due to the ethical lapses. These ethical lapses come into existence when managements of the firm, uses unethical practices to accomplish the goals of the firm. Maintaining financial and accounting standards in the business practices are necessary. The profession of accounting has become a mockery due to the accounting scandals that took place all over the world in theRead MoreCase Study: Accounting for Enron4415 Words   |  18 Pagesï » ¿ Case Study 9 Kim Chau California Southern University MKT 86519 Dec 19, 2014 N. Papazian Accounting for Enron Introduction In the case of Accounting for Enron, the case concerned one of the largest corporate bankruptcies in the US history at the turn of the 21st century. It was Enron Corporation, a one time seventh largest most successful US company, sixth largest energy company in the world, valued at over $70 Billion; they filed for chapter 11 on December 2, 2001. Just the year before