ACTG 495 Accounting Enron Case Analysis Paper.

There are two parts to this case. Part I focuses on what information was in the public domain as of the last audited financial statement for the year ended December 31, 2000. Part II focuses on the information that was in the public domain as of November 19, 2001 when Enron filed its 10-Q for the third quarter of 2001 and the events that led to Enron’s bankruptcy as of December 1, 2001. The most important thing about this case is that you must support your conclusions with evidence from Enron’s public filings only. ACTG 495 Accounting Enron Case Analysis Paper.Feel free to read as many articles as you would like to help with understanding Enron, but only use information from the public filings (e.g. 10-Ks and 10-Qs, and the information related to the 10-Ks and 10-Qs from the Enron Discussion Case) to prepare your responses.
Requirements Part I: In late February of 2001, you have been chosen to write an article for Investors Monthly to be published in the magazine in April 2001. The deadline for publication is March 10, 2001. Investor’s Monthly regularly analyzes the financial statements of public companies. Enron has just published its financial statements for the year ended December 31, 2000. At the time you are given the assignment Enron’s share price is over $80 per share.
Investor’s Monthly wants you to tell investors what they need to know from the financial statements. Your assessment needs to be a combination of both a fundamental financial analysis, covering profitability, cash flow, liquidity and solvency risk and a view of the business model and its risks and other insights gleaned from the documents filed with the SEC.
Your article must not be longer than 1,500 words or it cannot be published in the available space. Any conclusions need to be supported by reference to the data presented in the financial statements.
Part II: On December 2, 2001, Enron Corporation has filed for bankruptcy. On December 5, 2001 Investor’s Monthly approaches you again to ask you to describe the economic events that led to Enron’s Bankruptcy. Investor’s Monthly wants you to make reference to your comments in the first article while focusing primarily on what additional information was disclosed in Enron’s first, second and third quarter 10-Qs.
In your article, address at least the following questions: 1. What were the facts behind Enron’s bankruptcy? 2. What were the economic events that led to Enron’s failure? 3. Should Investors have been able to see this coming, especially if they had read your April 2001 article? 4. What actions, in any, could management of the company have taken to hold off bankruptcy?
For this second article, Investor’s Monthly has given you a 1,000 word limit.
Extra Credit (5%): Prepare one creative and descriptive PowerPoint slide summarizing each article (total of two slides). For credit, the PowerPoint slides must be emailed to jeckroth@pdx.edu by 11:59 PM Sunday, July 26, 2020.ACTG 495 Accounting Enron Case Analysis Paper. I will choose a select

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Enron Corp. and Subsidiaries
Balance Sheet
December 31,			2000	1999	1998
Assets
Current Assets
	Cash and cash equivalents		1,374	288	111
	Trade receivables, net		10,396	3,030	2,060
	Other receivables		1,874	518	833
	Assets from price risk management activities		12,018	2,205	1,904
	Inventories		953	598	514
	Deposits		2,433	81	0
	Other receivables		1,333	535	511
	Total Current Assets		30,381	7,255	5,933

Investments and Other Assets
	Investments in and advances to unconsolidated equity affiliates		5,294	5,036	4,433
	Assets from price risk management activities		8,988	2,929	1,941
	Goodwill		3,638	2,799	1,949
	Other		5,459	4,681	4,437
	Total investments and other assets		23,379	15,445	12,760

Property, Plant and Equipment at cost
	Natural gas transmission		6,916	6,948	6,936
	Electric generation and distribution		4,766	3,552	2,061
	Fiber-optic network and equipment		839	379	989
	Construction in progress		682	1,120	4,814
	Other		2,256	1,913	992
			15,459	13,912	15,792
	less accumulated depreciation		3,716	3,231	5,135
	Property, Plant and Equipment, net		11,743	10,681	10,657
	Total Assets		65,503	33,381	29,350

Liabilities and Shareholders’ Equity
Current Liabilities
	Accounts payable		9,777	2,154	2,380
	Liabilities from price risk management activities		10,495	1,836	2,511
	Short-term debt		1,679	1,001	0
	Customers’ deposits		4,277	44	0
	Other		2,178	1,724	1,216
	Total Current Liabilities		28,406	6,759	6,107
Long-term Debt			8,550	7,151	7,357
Deferred Credits and Other Liabilities
	Deferred income Taxes		1,644	1,894	2,357
	Liabilities from price risk management activities		9,423	2,990	1,421
	Other		2,692	1,587	1,916
	Total Deferred Credits and Other Liabilities		13,759	6,471	5,694
Minority Interest in Consolidated Subsidaries			2,414	2,430	2,143
Company-Obligated Preferred Securities of Subsidiaries			904	1,000	1,001

Shareholder’s Equity
	Second preferrred stock		124	130	132
	Mandatorily Convertible Junior Preferred Stock		1,000	1,000	0
	Common Stock		8,348	6,637	5,117
	Retained Earnings		3,226	2,698	2,226
	Accumulated Other Comprehensive Income		(1,048)	(741)	(162)
	Common Stock Held in the Treasury		(32)	(49)	(195)
	Restricted Stock and Other		(148)	(105)	(70)
	Total Shareholder’s Equity		11,470	9,570	7,048
	Total Liabilities and Shareholder’s Equity		65,503	33,381	29,350

Enron Corp. and Subsidiaries
Income Statement
Year ended December 31,			2000	1999	1998
Revenues
	Natural gas and other products		50,500	19,536	13,276
	Electricity		33,823	15,238	13,939
	Metals		9,234	0	0
	Other		7,232	5,338	4,045
	Total Revenues		100,789	40,112	31,260

Cost and Expenses
	Cost of gas, electricy metals and other products		94,517	34,761	26,381
	Operating expenses		3,184	3,045	2,473
	Depreciation, depletion and amortization		855	870	827
	Taxes, other than income taxes		280	193	201
	Impairment of long-lived assets		0	441	0
	Total costs and expenses		98,836	39,310	29,882
	Operating income		1,953	802	1,378

Other income and deductions
	Equity in earnings of unconsolidated equity affiliates		87	309	97
	Gains on sales of non-merchant assets		146	541	56
	Gains on the issuance of stock by TNPC, Inc.		121	0	0
	Interest income		212	162	88
	Other income, net		(37)	181	(37)
	Total other income and deductions		529	1,193	204
	Income Before Interest, Minority Interests and Income Taxes		2,482	1,995	1,582

Other
	Interest and related charges, net		838	656	550
	Dividends on company-obligated preferred securities of subsidiaries		77	76	77
	Minority interests in (earnings) losses of unconsolidated subsidaries		154	135	77
	Income tax expense		434	104	175
	Other charges		1,503	971	879
Net income before cumulative effect of accounting changes			979	1,024	703
	Cumulative effect of accounting change, net of tax		0	(131)	0
Net income			979	893	703

Enron Corp. and Subsidiaries
Statement of Cash Flows
Year ended December 31,			2000	1999	1998
Cash Flow From Operating Activities
Reconciliation of net income to net cash provided by operating activities
	Net income		979	893	703
	Cumulative effect of accounting chagnes		0	131	0
	Depreciation, depletion and amortization		855	870	827
	Impairment of long-lived assets (including equity investments)		326	441	0
	Deferred income taxes		207	21	87
	Gains on sales of non-merchant assets		(146)	(541)	(82)
	Changes in the components of working capital		1,769	(1,000)	(233)
	Net assets from price risk managemetn activities		(763)	(395)	350
Merchant assets and investments
	Realized gains on sales		(104)	(756)	(628)
	Proceeds from sales		1,838	2,217	1,434
	Additions and unrealized gains		(1,295)	(827)	(721)
	Other operating activities		1,113	174	(97)
			4,779	1,228	1,640

Cash Flows from Investing Activities
	Capital expenditures		(2,381)	(2,363)	(1,905)
	Equity investments		(933)	(722)	(1,659)
	Proceeds from sales of non-merchant assets		494	294	239
	Acquisition of subsidiary stock		(485)	0	(180)
	Business acquisitions, net of cash acquired		(777)	(311)	(104)
	Other investing activities		(182)	(405)	(356)
	Net Cash Used in Investing Activities		(4,264)	(3,507)	(3,965)

Cash Flows from Financing Activities
	Issuance of long-term debt		3,994	1,776	1,903
	Repayment of long-term debt		(2,337)	(1,837)	(870)
	Net incrase (decrease) in short-term borrowing		(1,595)	1,565	(158)
	Net issuance (redemption) of company obligated preferred securities
	of subsidiaries		(96)	0	8
	Issuance of common stock		307	852	867
	Issuance of subsidiary equity		500	568	828
	Dividends paid		(523)	(467)	(414)
	Net disposition of treasury stock		327	139	13
	Other financing activities		(6)	(140)	89
	Net Cash Provided by Financing Activities		571	2,456	2,266
Increase (Decrease) in Cash and Cash Equivalents			1,086	177	(59)
Cash and Cash Equivalents, Beginning of the Year			288	111	170
Cash and Cash Equivalents, End of the Year			1,374	288	111

Changes in Components of Working Capital
	Receivables		(8,203)	(662)	(1,055)
	Inventories		1,336	(133)	(372)
	Payables		7,167	(246)	433
	Other		1,469	41	761
			1,769	(1,000)	(233)


Profitability Ratios

Asset Turnover		Sales	100789	40112
		Average Total Assets	49442	31366

			2.04	1.28

Profit Margin			460	657
			100,789	40,112

			0.46%	1.64%

Return on Asset		Asset Turnover *
		Profit Margin
			0.93%	2.09%

Financing cost ratio			204	(5)
			460	657

			(0.44)	(0.01)

Capital structure			49,442	31,366
leverage			9,393	7,678

			5.26	4.09

Return on common			-2.17%	-0.07%
equity


Operating Cycle Ratios

Accounts receivable turnover			283,058	202,940
			94,517	34,761

			24.30	23.20

Inventory turnover


Account payable turnover


Deferred revenue turnover


Net operating cycle


Liquidity Ratios

Ability to cash flow from operations
to cover current debt and dividends

Free cash flow


Current ratio

Quick ratio(not including assets and
liab from price risk management)


Solvency Ratios

Total debt equity

Financing debt to equity

Long term ability of cash flow from
operations to cover debt and
dividends