Case Study Presented by Phillip C. Hammonds

 Baseline profits for years  Number of gas accounts in 1990  Number of accounts transferred to hedge fund  What would have been an appropriate raise for female accountant?

 Corporate senior management style  Accounting practices  Profit structure  Lines of communication

 Quarterly profits in millions in order ($33, $132, $157, $267, $289, $321, $342, $349)  Mean = $  Standard Deviation = $  Variance = 13,  Baseline profits had a high variance  Possibly due to accounting practices or other unknown factors

 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

 500 gas accounts could produce cash flow  Revenue would only last 30 days

 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

 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

 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