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Resources Unlimited Case Study

Resources Unlimited Case Study. Noah Finlan MSM – 630 Bellevue University Dr. Henry Dorr. Background. Resources Unlimited f ormed in 1985 . 38,000 miles of natural gas pipelines . Natural gas industry r egulated by the federal government . Set profit margins . Background (cont’d).

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Resources Unlimited Case Study

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  1. Resources UnlimitedCase Study Noah Finlan MSM – 630 Bellevue University Dr. Henry Dorr

  2. Background • Resources Unlimited formed in 1985. • 38,000 miles of natural gas pipelines. • Natural gas industry regulated by the federal government. • Set profit margins.

  3. Background (cont’d) • Merger of two companies. • New CEO appointed. • Industry deregulated. • Wild swings in cost price and selling price.

  4. Base Line Profits

  5. Base Line Profits • The quarterly data for the years of 1986 & 1987 are quite volatile and follow no specific trend that can be easily identified. • In addition, the method used to compute the profit is unknown at this point in time.

  6. Base Line Profits

  7. Gas vs. Oil Accounts

  8. Gas vs. Oil Accounts • 1988 – (64 Oil – 32 Gas) = 32 variant • 1990 – (86 Oil – 32 variant) = 54 Gas accounts

  9. Gas vs. Oil Accounts

  10. Accountant Salaries

  11. Accountant Salaries • Male 1 = $50,000 per year. • Male 2 = $55,000 per year. • Male 3 = $52,000 per year. • Female 1 = $32,000 per year. • Mean for 3 males = $52,333 per year.

  12. Accountant Salaries

  13. Accountant Salaries (cont’d) • Mean salary for 3 males = $52,333 per year. • Standard Deviation = 2,517 • Mean – (2 x Std. Dev.) = Legal Minimum • $52,333 – (2 x 2,517) = $47,300 • Legal Minimum – Female Salary = Raise amount. • $47,300 - $32,000 = $15,300 raise for the female accountant.

  14. Hedge Fund Transfers

  15. Hedge Fund Transfers Calculations: • 500 accounts / 30 days = 16.67 • 16.67 X 6 days = 100 accounts • 500 accounts – 100 accounts = 400 accounts. Determination: • The CEO transferred 400 gas accounts into a dummy hedge fund to lessen the cash demands. • This failed and the company filed for Bankruptcy in June 1994.

  16. Summation • The CEO makes the decisions and then poorly conveys them to subordinates to carry out. • The accounting department seems to be concerned with “talk on the street” instead of offering solutions to the problems.

  17. Summation (cont’d) • The lack of a clearly defined profit structure is due in large part to the volatility of the market. • The communication seems to flow from the top down only.

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