Hey guys, just a note that I think they will test general knowledge on these two cases. I dont think they will ask VERY VERY detailed questions, but be familiar with at the very least the bullshit they were pulling off and how they did it (before they got caught) Enron was using financing to increase its CFO to look more attractive Sunbeam created cookie jar reserves to draw on in later years, recorded revenue from contingent sales, accelerated sales from later periods into the present, and used improper bill and hold transactions. in 96’ sunbeam took a large restructuring charge (created cookie jar) in 97’ growth of inventories and receivables was far greater than sales growth there was a large fluctuation between net income and operating cash flow NI was negative while operating cash flow was positive (this is a bigger red flag than china’s) the company reduced its bad-debt reserves relative to the increase in receivables which is totally counter-intuitive and ass backwards. 4th quarter surprises were common Please post more if you know about Eonron
Enron: mark to market inflated sales to SPEs barter transactions I would know those 3 for sure
thank you sir
srsly, what is wrong with “NI was negative while operating cash flow was positive” other than that, i think this material is totallly testable. didn’t sunbeam have aggressive book to bill practices?
@ matt…didnt check up. But wasnt CFO negative, while NI was positive for Sunbeam
I remember reading a question somewhere regarding Enron. One of the problem was they showed CFF as CFO thus artificially inflating operating profits.
I personally think that accounting warning signs are generally testable, but I dont think you’ll be asked specific questions regarding what Enron and Sunbeam did or did not do. My $0.02 of course!