The Pros And Cons Of The Enron

702 Words 3 Pages
Enron has failed, there were plenty of red flags, that lead to this failure. Enron files for Chapter 11 protection, December 2, 2001, according to CNN this will be the largest bankruptcy in the United States, this will be leaving thousands of workers with valueless stock in their pensions. Third quarter on October 16, 2001 Enron announces a third quarter loss of $618 million. The article issued in April 2001 stated a key factor that showed that Enron was in trouble for a while.
Key Factors that were listed in April 2001 Article “Investors should have seen it Coming”
• Enron’s revenue has increased way more than the national average with a growth over 65%, this is unprecedented in the slow-moving energy and utility industries.
• Enron’s
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Enron used mystifying business models and unethical accounting practices. This information leads to misrepresentation earning and modified balance sheets that were in Enron’s favor, these issues lead to Enron’s bankruptcy. These issues were perpetuated directly or indirectly by actions performed by Kenneth Lay, Jeffrey Skilling, Andrew Fastow and other top executives. Kenneth Lay, chairman for Enron approved all the actions that were presented to him by Jeffrey Skilling and Andrew Fastow. One of the key down falls of Enron was the use of mark-to-market accounting, this accounting method based on market value, which was then overstated. Enron executives would enquire partnership companies with 50% ownership to hide Enron’s debt. A corporation becomes a subsidiary when another corporation acquires a majority of more than 50 percent of its outstanding voting …show more content…
Arthur Andersen insufficiency conducted an official financial examination of Enron with a lack of truthfulness, about the well-being of the company and company business operations. Enron has faith in financial intelligence, this was the company’s alternative for a good corporate strategy. The overconfidence of Enron’s executives who appeal the company, was the cream of the crop and brilliant, "the most innovative," and who represents themselves as superstars should be a "warning sign" for investors, directors and the

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