Transcript Case Study: The Demise of Resources Unlimited

Jessica Phung
MSM 630-T302
Bellevue University








Baseline profits for 1986-1988
Gas Accounts in 1990
Salary Discrimination
Hedge Funds
Senior Management
Accounting Practices
Profit Structure
Lines of Communication

What was the corporation’s baseline profits
for 1986-1988?
400
300
Q1
Q2
200
Q3
100
Q4
0
1986
1987
Cumulative Total: $1,890 million
 Mean: $236.25 million
 Standard Deviation: $115.43 million

 According
to Resources Unlimited,
in 1988 there were:
◦ 32 Gas Accounts
◦ 64 Oil Accounts
 Internal analysis projected 86 oil
accounts for 1990

What was their number of gas
accounts in 1990?
140
120
100
Natural Gas
80
Accounts
60
Oil Accounts
40
20
0
1988
1990


Gender discrimination in Accounting dept.
Previous salaries of employees performing
the same job title:
◦ (3) males
 $50,000; $55,000; $52,000
◦ (1) female
 $32,000

To avoid lawsuit, the appropriate raise for the
female accountant would be $20,000.



500 gas accounts to sustain for 30-days
CEO transfers gas accounts to a dummy-fund
to lessen cash demands
16.6 percent or 100 gas accounts were
transferred to the Hedge Fund




New CEO’s vision to take advantage of daily
changes in supply/demand was too risky.
No technically trained personnel to monitor
hedge funds.
Accounts sent a memo, no action was taken.
CEO transfers funds in an attempt to avoid
bankruptcy, insufficient planning.




CEO’s decision to use complex financial
instruments without technical advisors.
Accountants suspected skewed data.
Incomplete data sent to New York analysts.
Inability to provide accurate data on gas
accounts when requested.



Utilized derivatives and hedge funds,
complex financial instruments without
technical personnel.
Inaccurate forecasting, IE. 500 accounts to
sustain a company workflow for 30-days
Current structure produced insufficient data
and flawed reports



CEO ignored memo from accountants.
Incomplete data sent to Wall Street analysts
CEO transfers a number of gas accounts to a
dummy hedge fund but did not communicate
with accountants or strategic planning
division








Average baseline profits for 1986-1988 was
$236 million
Gas Accounts in 1990 was 43.
To settle the salary discrimination, a raise of
$20,000.
100 gas accounts moved to Hedge Fund.
CEO did not use technical advisors for derivatives
and hedge funds
Accounting wary of skewed data given to analysts
Profit structure produced incorrect forecasts.
Lack of communication in the organization, CEOs
to the bottom-line.