Resources Unlimited Corporation
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Transcript of Resources Unlimited Corporation
Resources Unlimited Corporation
Amanda Barfuss
Assignment 11.1
MSM 630
Resources Unlimited History
• Formed in 1985 through the merger of two natural gas pipelines
• Largest gas distribution network in the United States
• 38,000 miles of pipeline stretching from the southwest to the northeast
Baseline Profits 1986-1988Quarterly Earnings
1986-Qtr. 1 1986-Qtr. 2 1986-Qtr. 3 1986-Qtr. 4 1987-Qtr. 1 1987-Qtr. 2 1987-Qtr. 3 1987-Qtr. 40
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
350,000,000
400,000,000 Profits 1986-1988
Profits
• Unstable sales price
• Daily changes in supply and demand
Analysis of Gas and Oil Accounts
• 1988-Actual
• 64 Oil Accounts
• 32 Gas Accounts
• 1990-Projected Accounts
• 86 Oil Accounts
• 43 Gas Accounts
• Unable to verify the projected number of gas accounts in 1990
• Direct variance was known
Senior Management Style
• Slow to respond to issues
•Non-responsive
•Unclear lines of communication
• Lack of knowledge of the industry
•Questionable accounting practices
• 100 of the 500 gas accounts transferred to the hedge fund in attempt to buy time
Cost and Price Swing Solution
•Derivatives
•Hedge Funds
• Risky investments
• Accountants viewed this solution as unrealistic and attempted to persuade senior leadership to explore other options
Probable Discrimination SuiteAverage salary of a male employee in the Accounting
Department
= $52,000
Average salary of a female employee in the Accounting Department
= $32,000
Two standard deviations from the mean
• 18K raise in annual salary of female employee needed to avoid discrimination charges
Financial Analysis
• Lack of business plan
•Unpredictable cash flow
•Gas prices no longer regulated by Federal Government
•High natural gas extraction costs
•Unstable natural gas sales price
Factors that led to bankruptcy
• Lack of effective leadership
•Questionable to unethical accounting practices
• Lack of strategic planning
•HR Issues
• Salary Inequity
• Probably discrimination suite