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Essay / Research Paper Abstract
A 10 page paper providing vertical and horizontal analyses of Enron and WorldCom financial statements of 1999 and 2000, as well as several financial ratios including current ratio, debt/equity ratio and quick ratio, among others. The purpose here is to examine the balance sheets and income statements of Enron and WorldCom in 1999 and 2000 to determine what the companies could have done differently and which would have been the better investment before their respective falls. The paper concludes that despite the better apparent performance of Enron, WorldCom would have been the better investment. WorldCom was merely mismanaged; Enron set out to defraud investors. Bibliography lists 10 sources. Includes 4 tables.
Page Count:
10 pages (~225 words per page)
File: CC6_KSacctEnrWorldC.rtf
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Unformatted sample text from the term paper:
of the US investor world was shaken in the fall of Enron and WorldCom. Several members of each companys senior management either have been arrested or indicted, and the
stock of each now trades for a fraction of their earlier values, and trades over the counter rather than on a major exchange. Both have been delisted, both are
in bankruptcy and both are struggling to survive. The purpose here is to examine the balance sheets and income statements of Enron and
WorldCom in 1999 and 2000 to determine what the companies could have done differently and which would have been the better investment before their respective falls. Ratios
Current and Quick ratios need to be around 1.0 for the organization to be certain of being able to meet its short-term obligations. Table 1
holds these and other values for both Enron and WorldCom. Enrons current ratio, (Current Assets ? Current Liabilities) approaches a value of one,
but its quick ratio falls short. Because quick ratio is the result of [(Cash + Receivables) ? Current Liabilities], Enrons much lower value in quick ratio as compared to
its current ratio is understandable. WorldComs values in these two ratios reflect its precarious operation position. Neither company has particularly attractive debt-to-equity
ratios, but Enrons is less onerous that WorldComs. The two companies share similar situations when comparing long term debt to equity. Neither is stellar, but Enrons results look
less ominous than WorldComs. Table 1. Current Values Enron and WorldCom Item Enron WorldCom Price/Sales 0 0 Debt/Equity 1.35 2.60 Long-Term Debt/Equity 0.68 2.60 Current Ratio 0.92
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