Rise and Fall of Enron Research Paper Example | Topics and Well Written Essays - 1500 words

Rise and Fall of Enron - Research Paper Example Enron was an energy company that had the marketing of electricity and natural gas as its main activities.  Its’ revenues in 2000 were (supposedly) of $ 100 billion and the market value of the company exceeded $ 60 billion, which meant 70 times earnings and six times book value (Thomas, pp.41).  The company benefited from the deregulation of the energy market, facilitated by the company's own lobby in donations to political campaigns, but without the use of accounting gimmicks and management practices suspicions never had reached this level. Enron collapsed taking along with itself pension funds of its employees and other investors in the same category, a shortfall of at least $ 1.5 billion and dragging a debt of more than $ 13 billion.  For years, the company's directors maligned balance sheets, wiped the losses and inflated profits.  The magic book worked until the end of 2001.  Enron is the product of stunning deregulation of the energy sector.  It was a success and everyone wanted to invest in its actions as it was an excellent company with a higher rate of return, their investment valued up every month, even in times of crisis. The stock prices fell from a record high of $90 in 2000 to $0.60 at the end of 2001, after the scandal was revealed (Bratton, pp.1275). Trade operations of the company were based on complex financial transactions, most referring to businesses that would occur several years later, a practice that inflated their profits.  Operators placed the value of the company's shares way high, suggesting that before these future actions would even appreciate, without having to justify the markdown price, was the mark-to-market. Mark-to-market means considering a company’s assets so highly valued that it is possible to liquidate them at any time by the current market price.  The actions came to be worth about $ 85, behind the scenes; however, the company could only lose on failed projects internet and plants that never operated in India (Thomas, pp.50).   There is evidence that senior company executives were also involved in the fraud, as well as major banks.   The Securities and Exchange Commission initiated an investigation.  Enron was forced to redo their balance sheets for the last five years and admit that its profit in the period was $ 600 million lower than originally reported (Thomas, pp.44).   Auditors Fabricating the Facts The company’s auditor was Arthur Andersen, one of the key executives of the company, which contributed to concealing the scam, while, manipulating the revenue recognition principles.  Since being involved with the collapse of Enron, Andersen lost many prestigious clients. The company's employees took damage by losing their jobs; their savings in most cases were invested in Enron stock (Thomas, pp.46).  The tragic end of Enron shook the confidence of the American financial system.  According to the lawsuit filed by former shareholders, Enron hid th e injury and decreasing profits with the connivance of accounting firm, Arthur Andersen auditor (Healy & Palepu, pp.12).  Former Enron auditor approved fraudulent accounting practices and illegal schemes adopted to hide losses and then destroyed the evidence of the crime.   Involvement of White House   Enron was regarded as an innovator, admired (elected between 1996 and 2001 as one of the most admired companies according to  Fortune  magazine) and dynamic, and Kenneth Lay was a celebrity worlds of business (something that is not seen much in the post

Consulting critical path analysis Case Study Example | Topics and Well Written Essays - 750 words

Consulting critical path analysis - Case Study Example duce products that are innovative in the real sense which is wasting a lot of resources and time of the company, therefore this should also be looked at and the company should come up with a better plan of where and how to invest the capital. All these steps are vital to be carried out in an order so that the company can benefit from them. The first step towards coming up with an optimal solution would be to find a common ground for both the technical and sales team. This has to be done in order to work collaboratively with more resources to help solve the case. The technical and the sales team might seem an odd couple, but these days a product’s success depend upon the cooperation, ability, and willingness of the teams involved in it. Despite the differences between the technical and sales team, they are more linked then they actually think. In order to achieve success for themselves it is important that they work together for the success of the product, or a strategy in this case, from product launch concept to its implementation both of the teams’ efforts are required. Therefore, it is important that this not so odd couple be realized that there is only one way to conquer their common goal; to work together. Once both the teams realize the common ground between them, the strategy formulation stage wou ld be made easy and highly productive. (Kelly, 2002) The second stage that needs to be undertaken is the research stage. The case presented states that there has not been enough research done on the following issue, and without much analysis the consultants have highlighted the high volume of the products as the main reason for the decline in sales. Therefore, it is important to be sure of the issue and do additional research for that matter. In the research stage, the research teams carry out a consumer survey to find out their preferences and come forward with solid results supported by genuine facts and figures. If still the result is the same then the next