Research Paper on:
WorldCom and Enron Comparison

Unformatted Sample Text from the Research Paper:
of the US investor world was shaken in the fall of Enron and WorldCom. Several members of each companys senior management either have been arrested or indicted, and the  stock of each now trades for a fraction of their earlier values, and trades over the counter rather than on a major exchange. Both have been delisted, both are  in bankruptcy and both are struggling to survive. The purpose here is to examine the balance sheets and income statements of Enron and  WorldCom in 1999 and 2000 to determine what the companies could have done differently and which would have been the better investment before their respective falls. Ratios  Current and Quick ratios need to be around 1.0 for the organization to be certain of being able to meet its short-term obligations. Table 1  holds these and other values for both Enron and WorldCom. Enrons current ratio, (Current Assets ? Current Liabilities) approaches a value of one,  but its quick ratio falls short. Because quick ratio is the result of [(Cash + Receivables) ? Current Liabilities], Enrons much lower value in quick ratio as compared to  its current ratio is understandable. WorldComs values in these two ratios reflect its precarious operation position. Neither company has particularly attractive debt-to-equity  ratios, but Enrons is less onerous that WorldComs. The two companies share similar situations when comparing long term debt to equity. Neither is stellar, but Enrons results look  less ominous than WorldComs. Table 1. Current Values Enron and WorldCom Item Enron WorldCom Price/Sales 0 0 Debt/Equity 1.35 2.60 Long-Term Debt/Equity 0.68 2.60 Current Ratio 0.92