FIN

Analyze the ethical violations of the company you researched.

I’m trying to briefly analyze the ethical violation that happened more than a decade ago with company called Enron. It was first established as an interstate pipeline company. In the following 2 decades, Enron grew with high rates and soon became one of the biggest energy traders in the world. Enron won many titles for the short period of time being a leader in electricity, natural gas and communications.

Now, let’s switch to negative part of the Enron and see what led this company to ethical violations. Because of an increased tough competition Enron started using international investments and diversification in order to keep its position. Some faulty decisions in management in terms investment proved how harmful they can be. However, this company never declared about its losses until October of 2001.The more devastating fact is that Enron declared high revenues that was overstated and hiding its debt and liabilities from public. Numbers that they came up with had no background proof. These statements were nothing but manipulation and cheating over investors’ money. Moreover Enron never disclosed its risk to investors, in fact executives were encouraging investors to buy Enron’s stock through mass media having disclosed high earnings forecast. Even employees were asked to buy company’s stocks.

One of key points of the whole story is that an audit company named Arthur Anderson had helped Enron to hide the fraud schemes for more than 4 years. Top executives were putting millions of dollars in their pockets through stocks which went up because of fraud. (http://www.supremecourt.gov)

In October 2001 Enron declared loss of 618 million dollars. Right after that the chief ...

... middle of paper ...

...ing to launch a brand new application for smartphones. On July 30th I sold those shares of Google at $120. That was total sale of $120,000. During the time period of owning the stocks, I received dividends for $12,000 and also collected $8,000 for selling the preemptive rights of an additional capital of the company.

Calculating the profitability of investment requires the following procedure:

- Annual profit =($20,000/$100,000)X(365/122)X100%= 59.8%

This investment in Google’s stock gives an annual profit of 59.8%. This profit is considered as a very high return on investment for this short period of time.

In order to make investing beneficial as in the above scenario investor needs to make a good research on the market, analyze new trends and check on stock price movements. All of these combined with necessary calculations will take high risk investment to rise.