Compare and Contrast the Failure of a Business

Bonita Nelson

University of Phoenix

LDR/531

Tricia Lara

October 7, 2009

“WorldCom is one of the largest telecommunications company with a 20 million consumer customer base, thousands of corporate clients and over 80,000 employees.” This company is well rounded; it “owns UUNET controlling over 50% of the wires that internet service provider use as superhighways to carry internet traffic between cities and across continents.” “MCI is the long distance unit of WorldCom, which it acquired in 1988.” “WorldCom improperly booked $3.8 billion as capital expenditures, boosting cash flow and profit over the past 5 quarters, disguising the actual net loss for 2001 and the first quarter of 2002.” “In reality WorldCom would have posted a loss instead of the $1.4 billion net income in 2002.” “The first quarter of 2002 would also post a loss instead $130 million in net income.” “It is possible that the accounting irregularities go back to 2000.” “In simple terms WorldCom did not account for expenses when it incurred them, but hid the expenses by pushing them into the future, giving the appearance of spending less and therefore making more money.”

WorldCom CEO, Ebbers made some bad business decisions about making personal loans totaling $366 million from the company. That was the first mistake the CEO made that led to many more down the road. Ebbers the CEO allowedSullivan, CFO to make bad business financial decisions. Allowing the CFO to put expenses somewhere in the future rather than the present was extremely hurtful for the company. WorldCom made a bad decision and now is paying for it in a terrible way. Having to file for bankruptcy and laying off several thousand of employees is a lot. Making personal loans from the company alone is unethical as a business man. In my last class the studentshad to figure out about companies practices if they were ethical or unethical and WorldCom CEO has practice several unethical behaviors within his company. The CFO also...