Enron Corporation Case Study
1.	ENRON CORPORATION Introduction of company: Enron Corporation was present in Houston, America and was the largest marketer of natural gas transmission network in North America. Its pipelines are present across 36000 miles in North America. A magazine named FORTUNE stated this corporate as "MOST INNOVATIVE". Enron Corporation was a merger company. Houston Natural Gas (HNG) and InterNorth merge with each other in May 1985. HNG was formed in 1920s and provide gas to retail customer in Houston. In 1970 they decided to sell their retail business for the sake to concentrate only on gas exploration and production. After 8 years in 1984 the financial statement of company shows the asset of $3.7bilion, sales of $2billion and profit of $123million.…show more content…
Enron also introduces itself in the water sector with the company name azurix which later on floats in the NYSE. Azurix failed to become successful in the water sector. Enron was the second largest company in power sector of U.S. but in Oct, 2001 this company was filed as bankrupt. Reason for Bankrupt: Enron Corporation performs well in the U.S and its stock price was also very high as compare to other companies in energy sector. But due to some frauds this company can be filed as bankrupt in Oct, 2001. After Kenneth lay, the CEO of the company was Jeffrey Skilling. He develops the staff of executives and well known person Andrew Fastow was CFO of the company. Fastow was very competent and skillful person in the gas field industry. These two people with their staff put many frauds and blunders in the financial statement of the company. Financial statement of the company does not show the actual debt investment of amount. They also pressurized the audit committee (Arthur Anderson) to ignore the issue. They also misled BOD's of the company.…show more content…
Parmalat Introduction of company: Parmalat is an Italian milk distributing company. It is multinational company having many branches in different companies. It produces long lasting milk using ultra high temperature process. This company first introduce in 1961. Calisto Tanzi was founder of Parmalat. Lactalis is its parent company. Headquarter of Parmalat is present in Collecchio, Italy. The main products of Parmalat are Milk, Dairy products, fruit juice and tea. Company has more than 140 production units and number of employees are 36000. This company is listed in the stock exchange of Italy named Borsa Italiana. In 1961 Calisto opened a small pasteurizing milk plant in Parma which later on converts into multinational company. Two decades after the formation Parmalat acquire many of the companies and also provide variety of food and dairy products. Due to this reason the share price rise and make records. At that time the value of company was €3.7 billion. Company was first listed in Milan Stock Exchange in 1990. Now company provides its products almost in the entire world. Company also faces many problems during its age. The years 2001 to 2003 were not good for the Parmalat. In 2003 company was bankrupt by the
Barclays: Capital Corruption
Barclays couldn't gain much of a profit because the country was suffering from financial crisis which left several companies being shut down. The manipulation of Libor rate left several industries under huge debts during the crisis and the financial crisis worsen up because of the debt individuals were in. Barclays didn't gain but it lost a lot after the Libor scandal was revealed as the bank was being fined for its involvement in the manipulation of Libor rates. Barclays reputation as the largest bank was tarnished after the scandals were revealed. Barclays lost more money than they could have made by the fines they are currently paying for their role in the manipulation of the Libor rate.
The Smartest Guys In The Room Analysis
The bankruptcy lead to criminal charges against Enron's top executives. In 1987, two years after the company was established, Enron experienced its first crisis where they were on the brink of bankruptcy due to traders making bets on the oil markets. Also Louis Borget, one of the traders was also caught shuffling money into off shore accounts Kenneth Lay, the CEO, was informed by auditors about the wrong doings that was going on but he encouraged them to keep bringing in the money. The traders were fired after gambling away almost all of Enron's money. Jeffrey Skilling was brought in by Lay under the conditions that Market
Financial Issues In Enron
Conflicting Interest: It has been suggested that conflicts of interest and a lack of independent oversight of management by Enron's board contributed to the firm's collapse. Moreover, some have suggested that Enron's compensation policies engendered a myopic focus on earnings growth and stock price. In addition, recent regulatory changes have focused on enhancing the accounting for SPEs and strengthening internal accounting and control systems. We review these issues, beginning with Enron's board. The conflict of interest between the two roles played by Arthur Andersen, as auditor but also as consultant to Enron.
Global Financial Crisis Case Study
AIG thought that what it insured would never have to be covered, and if it did, it would be in little amounts. But when foreclosures increased to incredibly high levels, AIG had to pay what it promised to cover which eventually caused a huge hit to AIG's revenue stream. The AIG Financial Products devision ended up paying around $25 billion dollars in losses which caused a massive hit to the parent company's stock price. Meanwhile, accounting problems within the division also caused losses which also lowered AIG's credit rating. It was very clear that AIG was in danger of bankruptcy.
The Importance Of Audit
Enron and Arthur Anderson were both giants in their own industry. The sudden fall of Enron in the end of 2001 shattered not just the business world but also resulted in the dissolution of Arthur Anderson, well established as one of the big five accounting firms in the world. In addition to being the largest Bankruptcy reorganization in American History at that time, Enron was attributed as the biggest audit failure of the time. Jeffrey Skilling, with his staff of executives that by the use of accounting loopholes, mark-to-market accounting, special purpose entities & poor financial reporting was able to hide billions of dollars in debt and failed deals & projects. CFO, Andrew Fastow not only lead Englads, BOD & audit committee on high risk accounting practices but also pressured Anderson to ignore the issues.
Case: Enron: Case Study Of ENRON
Enron formed by merger: ENRON formed by a merger between houstan natural gass an omaha based internorth . Kenneth Lay, who had been the (CEO) of Houston Natural Gas, became Enron 's CEO , and quickly makes Enron into an energy trader and supplier. Enron Named America 's Most Innovative Company: By 1993, Enron had a number of limited liability special purpose entities that allowed Enron to hide its liabilities while growing its stock price. Enron 's stock price, which hit a high of United states $90 per share in mid 2000, caused shareholders to lose nearly $11 billion when it plummeted to less than $1 by the end of November 2001. Analysts were criticizing Enron for "swimming in debt," but the company continued to grow developing a large network of natural gas pipelines, and eventually moving into the pulp and paper and water
Csx Corporation Case Study
Home Depot's stock has fallen since he took over in December 2000; meanwhile, rival Lowe's shares have soared. BUT IN LAST YEAR'S proxy, the footnote changed. Mr. Nardelli now gets his incentive pay if the company "achieves specified levels of average diluted earnings per share" -- a measure by which Home Depot looks far more successful. Shareholders may not be better off, but Mr. Nardelli is." This statement shows that pay can be changed even if the structure has been
Showa Shell Sekiyu Case Study
Showa Shell Sekiyu's 1.07 billion loss. In the year 1985 Showa Shell Sekiyu came into being as a merger between Showa Oil and Shell Sekiyu. The Royal Dutch Shell group owns 50% in this company. It is into petroleum production and sales. It is formed as merger between Showa oil which was formed in the year 1931 and Shell Sekiyu which is over 100 years old.
Nestle Pest Analysis
Nestle was founded in 1886 by Henri Nestle. It started off with one man's initiatives to produce infant formula (for infants who are intolerant to their mother's milk) and grew into a multi-national cooperation worldwide. Nestle has more than 250,000 employees worldwide and factories all around globally. Nestle is more than just the largest food and beverage Company in the world. It is now evolving as the world's leader in nutrition, health and wellness.
Case Study Of Arthur Andersen's Company
(Squires, 2003) In the 1950s Andersen launched a consulting business that nearly immediately experienced colossal and explosive growth as global demand for information technology increased. Within 20 years a significant portion of Andersen's worldwide fees came from its consulting business. In fact, by 1979 Andersen had become the world's largest business services firm. Consulting revenue eclipsed audit revenue for the first time in 1984 and continued to grow at a rapid pace. This explosive growth was accompanied by a shift in Andersen's strategic vision.
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