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Resources Unlimited Corporation

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  1. Resources Unlimited Corporation Amanda Barfuss Assignment 11.1 MSM 630

  2. Resources Unlimited History • Formed in 1985 through the merger of two natural gas pipelines • Largest gas distribution network in the United States • 38,000 miles of pipeline stretching from the southwest to the northeast

  3. Baseline Profits 1986-1988Quarterly Earnings • Unstable sales price • Daily changes in supply and demand

  4. Analysis of Gas and Oil Accounts • 1988-Actual • 64 Oil Accounts • 32 Gas Accounts • 1990-Projected Accounts • 86 Oil Accounts • 43 Gas Accounts • Unable to verify the projected number of gas accounts in 1990 • Direct variance was known

  5. Senior Management Style • Slow to respond to issues • Non-responsive • Unclear lines of communication • Lack of knowledge of the industry • Questionable accounting practices • 100 of the 500 gas accounts transferred to the hedge fund in attempt to buy time

  6. Cost and Price Swing Solution • Derivatives • Hedge Funds • Risky investments • Accountants viewed this solution as unrealistic and attempted to persuade senior leadership to explore other options

  7. Probable Discrimination Suite Average salary of a male employee in the Accounting Department = $52,000 Average salary of a female employee in the Accounting Department = $32,000 Two standard deviations from the mean • 18K raise in annual salary of female employee needed to avoid discrimination charges

  8. Financial Analysis • Lack of business plan • Unpredictable cash flow • Gas prices no longer regulated by Federal Government • High natural gas extraction costs • Unstable natural gas sales price

  9. Factors that led to bankruptcy • Lack of effective leadership • Questionable to unethical accounting practices • Lack of strategic planning • HR Issues • Salary Inequity • Probably discrimination suite