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Enron Harvard Business Case Study

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In evaluating the credit standing, many factors need to be considered; for instance, we need to identify what the potential risks will be. Moreover, the structures of notes, the policies and practices of the corporations are also aspects we need to evaluate. Besides that, the more important things we need to look at are credit profile, quality and anticipated cash flow of the assets. As we can see in the income statement and the balance sheet, the revenue, which was shown in the income statement, increased from $8,274,847 in 1988 to $9,835,656 in 1989. The asset, which was shown in the balance sheet, also increased from $8,734,801 in 1988 to $9,104,803 in 1989.In evaluating the credit standing, many factors need to be considered; for instance, we need to identify what the potential risks will be. Moreover, the structures of notes, the policies and practices of the corporations are also aspects we need to evaluate. Besides that, the more important things we need to look at are credit profile, quality and anticipated cash flow of the assets. As we can see in the income statement and the balance sheet, the revenue, which was shown in the income statement, increased from $8,274,847 in 1988 to $9,835,656 in 1989. The asset, which was shown in the balance sheet, also increased from $8,734,801 in 1988 to $9,104,803 in 1989. Compared with the increment of revenue and asset, the increment of the total deferred credits and other liabilities was relatively small, which was from $2,255m406 in 1988 to $2,275,040 in1989. Moreover, according to Exhibit 8, the probability BBB corporations, which Enron Corp. is now evaluated, have 0.8427 possibilities to stay the same. The possibility of upgrading to A is 0.0656 that is slightly higher than that of downgrading to BB that is 0.0644. Therefore, we infer that the possibility that the Enron's future credit standing will upgrade is more likely.

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