Regarding Enron, this was a company that resulted in the creation of the Sarbanes-Oxley Act and many reforms to the accounting profession. Research the company and answer the following questions.Ratio Analysis. Using the 2000 Enron 10-K, calculate 2 years of the following liquidity, solvency and profitability ratios. Include your calculations and analysis for these ratios and what they tell you about the company in a minimum of 1 page.

Liquidity: Current ratio, Accounts receivable turnover

Solvency: Debt to assets ratio, Times interest earned

Profitability: Profit margin, Earnings per share

Arthur Andersen LLP Houston, Texas February 23, 2001 PAGE ENRON CORP. AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENT CAPTION > (In millions, except per share amounts) S Revenues Natural gas and other products Electricity Metals Other Total revenues Costs and Expenses Cost of gas, electricity, metals and other products Operating expenses Depreciation, depletion and amortization Taxes, other than income taxes Impairment of long-lived assets Total costs and expenses Operating Income other Income and Deductions Equity in earnings of unconsolidated equity affiliates Gains on sales of non-merchant assets Gain on the issuance of stock by TNPC, Inc. 94,5173,18485528098,8361,95334,7613,04587019344139,31080226,3812,47382720129,8821,378 871461213095419756 FN The accompanying notes are an integral part of these consolidated financial statements. ENRON CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FN The accompanying notes are an integral part of these consolidated financial statements. / TABLE depletionandamortizationProperty,plantandequipment,net3,71611,7433,23110,681 Total Assets $65,503 $33,381 FN The accompanying notes are an integral part of these consolidated financial statements. / TABLE PAGE> TABLE ENRON CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET CAPTION (In millions, except shares) S LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable Liabilities from price risk management activities Short-term debt Customers' deposits Other Total current liabilities Long-Term Debt Deferred Credits and Other Liabilities Deferred income taxes Liabilities from price risk management activities Other December 31, 2000 1999 C C $9,777$2,154 10,4951,836 1,6791,001 4, 27744 2,1781,724 28,4066,759 8,5507,151 1,6441,894 9,423 2,990 2,6921,587 other Total deferred credits and other liabilities 13,759 6,471 Commitments and Contingencies (Notes 13, 14 and 15) Minority Interests 2,414 2,430 Company-Obligated Preferred Securities of Subsidiaries 984 1,000 Shareholders' Equity Second preferred stock, cumulative, no par value, 1,370,000 shares authorized, 1,240,933 shares and 1,296,184 shares issued, respectively 124 Mandatorily Convertible Junior Preferred Stock, Series B, no par value, 250,000 shares issued Common stock, no par value, 1,200,000,000 shares authorized, 752,205,112 shares and 716,865,081 shares issued, respectively Retained earnings Accumulated other comprehensive income Common stock held in treasury, 577, 066 shares and 1,337,714 shares, respectively Restricted stock and other Total shareholders' equity 1,000 8,348 3,226 (1,048) (32) (148) 11,470 $65,503 $33,381 FN The accompanying notes are an integral part of these consolidated financial statements. / TABLE PAGE TABLE ENRON CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS CAPTION (In millions) S Cash Flows From Operating Activities Reconciliation of net income to net cash provided by operating activities Net income Cumulative effect of accounting changes Depreciation, depletion and amortization Impairment of long-lived assets (including equity investments) Deferred income taxes Gains on sales of non-merchant assets Changes in components of working capital YearendedDecember2000C31,1999C1998C Net assets from price risk management activities (763) (395) 350 Merchant assets and investments: Realized gains on sales (104) (756) (628) Proceeds from sales 1,838 2, 217 1, 434 Additions and unrealized gains (1,295) (827) (721) Other operating activities 1,113 174 (97) Net Cash Provided by Operating Activities 4,779 1,228 1,640 Cash Flows From Investing Activities (2,381) (2,363) (1,905) Equity investments (933) (722) (1,659) Proceeds from sales of non-merchant assets 494 294 239 Realized gains on sales Proceeds from sales Additions and unrealized gains Other operating activities Net Cash Provided by Operating Activities Cash Flows From Investing Activities Capital expenditures Equity investments Proceeds from sales of non-merchant assets Acquisition of subsidiary stock Business acquisitions, net of cash acquired (see Note 2) Other investing activities Net Cash Used in Investing Activities Cash Flows From Financing Activities Issuance of long-term debt Repayment of long-term debt Net increase (decrease) in short-term borrowings Net issuance (redemption) of company-obligated preferred securities of subsidiaries Issuance of common stock Issuance of subsidiary equity Dividends paid Net disposition of treasury stock other financing activities Net Cash Provided by Financing Activities Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents, Beginning of Year Cash and Cash Equivalents, End of Year Changes in Components of Working Capital Receivables Inventories Payables other Total (104)1,838(1,295)1,1134,779(756)2,217(827)1741,228(628)1,434(721)(97)1,640 (2,381)(2,363)(1,905) (933) (722) (1,659) 494 294 239 (485) (180) (777) (182) (311) (104) (405) (356) (4,264) (3,507) (3,965) 3,9941,7761,903 (2,337)(1,837)(870) (1,595)1,565 (158) (96) 307 500 (523) 327 (6) 571 1, 086 288 $1,374 $288 $111 $(8,203) 1,336 7,167 1, 469 $1,769 $1,769 (662) (133) (246) 41 $(1,000) $(1,055) (372) 433 761 761 (233) FN FN The accompanying notes are an integral part of these consolidated financial statements. / TABLE PGE TABLE ENRON CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY /TABLE