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Resources unlimited corporation. Case Study Presented by Phillip C. Hammonds. Review of History for years 1987-1988. Baseline profits for years 1987-1988 Number of gas accounts in 1990 Number of accounts transferred to hedge fund - PowerPoint PPT Presentation
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RESOURCES UNLIMITED CORPORATION
Case Study Presented byPhillip C. Hammonds
Review of History for years 1987-1988
Baseline profits for years 1987-1988 Number of gas accounts in 1990 Number of accounts transferred to hedge
fund What would have been an appropriate
raise for female accountant?
Additional items to review
Corporate senior management style Accounting practices Profit structure Lines of communication
Baseline Profits for Years 1987-1988 in Millions
1987 19880
50
100
150
200
250
300
350
400
1st quarter2nd quarter3rd quarter4th quarter
Statistics on profits
Quarterly profits in millions in order ($33, $132, $157, $267, $289, $321, $342, $349)
Mean = $236.25 Standard Deviation = $115.43 Variance = 13,323.64 Baseline profits had a high variance Possibly due to accounting practices or
other unknown factors
Number of Gas Accounts in 1990
In 1988 there were 32 gas accounts and 64 oil accounts
1990 projections - 86 Oil accounts 1990 projections - ? Gas accounts Gas accounts should have been 43 total
1988 total Accounts
64
32
Total Accounts = 96
Oil AccountsGas Accounts
Number of accounts transferred to a hedge fund
500 gas accounts could produce cash flow
Revenue would only last 30 days
Female Accountant’s appropriate compensation
Accountant’s Salaries $50,000, $52,000, $55,000
Female Accountant Salary was $32,000 Mean Male Salary = $52,333 Standard Deviation = $2516 At 95% of Population or 2 Deviations Salary should have been $47,000
(rounded to nearest $1000) A $15,000 raise would have been
appropriate
Gender Salary Comparison
Salaries0
10,000
20,000
30,000
40,000
50,000
60,000
Male #1Male #2Male #3Female
Corporate Management Style
Appears that there was limited research Management should have listened to
accountants Management should have been more
transparent to media CEO failed to display ethics and
leadership CEO deliberately transferred gas
accounts to dummy hedge fund
Accounting Practices and Profit Structure
Accountants attempted to identify problem with derivative model
Focus was too concerned about wall street
The attempt was to balance out profits In reality it did not work Lines of Communication broke down Bankruptcy was the result of these
failures
