You Decide: Could we see Enron coming? Sherron Watkins, the whistle-blower at Enron, made the following statement

Question:

You Decide: Could we see Enron coming?

Sherron Watkins, the whistle-blower at Enron, made the following statement at a conference that one of the authors attended: “If anyone would have been watching the cash flows of Enron, they could have figured out that there were problems.” While traditional ratios don’t reveal the problems, the following ratio provides some interesting results when looked at on a quarterly basis:

image text in transcribed

During the period 1998 and 2001, this ratio revealed the following:

image text in transcribed

Does this ratio look normal or as expected for a nonfraud committing company? What would you expect this ratio to look like? Why do the yearly results look so different than the quarterly results?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Accounting Concepts And Applications

ISBN: 9780324376159

10th Edition

Authors: W. Steve Albrecht, James D. Stice, Earl K. Stice, Monte R. Swain

Question Posted: