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Why the Heck Is Enron on the List?
FORTUNE.COM
April 15, 2002
How did Enron finish fifth on our 2001 ranking of the Fortune 500? To begin with, Enron, going by the restated financials it issued for the first nine months of last year, inarguably was a huge company. In fact, its $139 billion in revenues for nine months exceeded General Electric's full-year revenues of $125 billion.
Then, on Dec. 2, Enron went into bankruptcy (a fact that doesn't disqualify it for the 500 list), and it has yet to report fourth-quarter results. The missing quarter, in which we knew revenues had fallen dramatically, gave us a problem. So we took a stab at estimating full-year revenues and concluded they might reach a maximum of $160 billion. But rather than create a precedent of using revenue estimates on the FORTUNE 500 list, we decided to rank Enron based on its nine-months revenues of $139 billion-and that figure is what makes it fifth on our list, behind Wal-Mart, Exxon Mobil, GM, and Ford. (Had we used the $160 billion estimate, Enron would still have trailed Ford.) Given the questions that hang over Enron's profits, assets, and stockholders' equity, we didn't think we could report plausible figures for those categories.
So how valid are Enron's mountainous revenues? To answer that you need to understand a bit about the energy trading contracts Enron bought and sold.
Read on for the full story: The Revenue Games People Play |
