Write Up on Ratio Analysis

H APTE 4 R C 19843_04_c04_p100-140.qxd 12/7/05 12:42 PM sc eitherywag 100 digest OF FINANCIAL STATEMENTS1 Lessons Learned from Enron and WorldCom 1 We have cover this chapter some(prenominal) untimely in the course and toward the end. Early coverage gives students an overview of how financial decisions propel financial statements and results, and thus of what financial management is all about. If it is covered later, after coverage of bond and job valuation, venture analysis, not bad(p) bud raging, capital structure, and working capital management, students can make better realize the logic of the ratios and see how they are used for contrary purposes. Depending on students backgrounds, instructors may want to cover the chapter early or late. © AP depiction/RON EDMONDS Enron, WorldCom In early 2001, Enron appeared to be on elapse of the world. The high-flying energy cockeyed had a commercialise capitalization of $60 billion, and its stock was affair at $8 0 a share. smother Street analysts were touting its innovations and management supremacy and strongly recommending the stock. Less than a year later, Enron had declared bankruptcy, its stock was basically worthless, and investors had lost billions of dollars. This outstanding and sudden collapse left wing many enquire how so much value could be undone in such a short period of time. spot Enrons stock fell steadily throughout the startle instigate of 2001, most analysts voiced no concerns. The general consensus was that it was simply caught up in a sell-off that was affecting the entire stock market and that its semipermanent prospects remained strong. However, a hint of trouble came when Enrons CEO, Jeffrey Skilling, unexpectedly resigned in August 2001; he was replaced by its chairman and old CEO, slew Lay. By the end of August, its stock had fallen to $35 a share. Two months later, Enron stunned the financial markets by announcing a $638 million loss, along with a $1. 2 billion write-down in its book value equit! y. The write-down, which false out to be...If you want to get a full essay, nine it on our website: BestEssayCheap.com

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