$10-72$ Classic Case of Shareholders" Equity Section

Enron Corporation was a worldwide energy company with annual revenues in excess of

$$40$ billion in $1999.$ Its main activities were in natural gas and electricity. Enron's collapse was

one of the most spectacular events of the recent past. Enron filed for bankruptcy protection on

December $2,2001,$ and $2$ years later its common stock shares were trading at $$\mathrm{.}04$ per share.

Events surrounding Enron led to the failure of its audit firm, Arthur Andersen. The data here

are from the company's $1999$ annual report $($ $ in millions$).$

Prepare the stockholders' equity section of Enron's $1999$ balance sheet. Include the amount

for total stockholders' equity.

Enron paid $$355$ million of cash dividends on common stock and $$66$ million of cash divi$-$

dends on preferred stock in $1999.$ Compute Enron's net income for $1999.$

Explain Enron's net acquisition or disposition of treasury shares during $1999.$ Include the

increase or decrease in total number of shares and the average cost per share of those acquired

or sold. What is the average purchase price $($cost$)$ of the shares remaining in the treasury at the

end of $1999?$

Calculate book value per share at December $31,1999,$ and the market$-$to$-$book ratio on that

date, given a market price per share of about $$45.$

The price per share peaked in $2000$ at about $$91.$ Estimate the loss in total market value for

Enron from its peak until December $2003.$ Assume $716$ million shares outstanding.