Enron
In recent weeks, our main focus of attention has been diverted away from the World Trade Center catastrophe, and has been centered more on another catastrophe of great magnitude. Though, this catastrophe wasn?t so much a physical one, it nonetheless caused a great deal of suffering and personal loss. Moreover, just like the World Trade Center tragedy, the economical loss caused by this catastrophe is staggering. This calamity is known as ?the Enron mess.?
Enron, before it collapsed, had become one of America?s largest corporations, with revenue of more than $100 billion a year. Yet, somehow, investors and analysts were unaware of the impending doom. How was it that such a large corporation can fall so hard and quickly and catch everyone by surprise
There were many reasons for the failure of Enron, but the mainreason was in the accounting systems. As the companies stock was thriving, the company was taking additional and larger risks, most of which were legal and hiding it behind financial transactions which have become more and more technical and sophisticated. They had secretive offshore partnerships, where Enron was parking billions of dollars in debt. There are two key reasons why these things were able to happen and
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