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What brought about Enron's col

 

            Enron, the Houston, Texas based company, created in 1985, grew into the nation's seventh largest company in revenue by providing electricity to its consumers. With the company's assets estimated at $62 billion, what lead this impressive corporation to file for bankruptcy? I believe that Enron's collapse was accredited to the failure of postmodern corporate values because of their accounting and business practices. .
             Between 1996 and 2000, Enron reported an increase in sales from $13.3 billion to $100.8 billion. As of 2000, Enron had approximately 19,000 employees. Per each employee, Enron says it generated $5.3 million in revenues. The men and women of Enron made the employees at Microsoft (revenue per employee: $610,256) look slothful. Enron also put other workers of major corporations like Citigroup and IBM to shame. .
             Enron's reported revenue was based on its exploitation of a loophole in accounting rules that allowed it to book revenue from huge energy-derivative contracts at their gross value, not their net value as done with other securities dealings. In actuality, it used complex partnerships to keep some $500 million in debt off its books and hide its financial troubles so it could continue to get cash and credit to run its trading commerce. Enron officials have acknowledged that the company had overstated its profits by more than $580 million since 1997. It made a series of bad investments in power plants, electricity and gas distribution units, pipelines, and paper mills. It overpaid for many of these investments, but also ran into project cost over-runs, and a wide variety of other problems. .
             Lack of clearness and openness with investors contributed to a massive loss of investor confidence and insecurity on the part of other energy traders to deal with Enron. Enron created a series of limited partnerships, which were effectively supported by Enron, but were not consolidated.


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