data moody riskcalc craig kim know obtained 60 day trial subscription moody riskcalc wanted know makes sense enron purchase riskcalc well plowing 100 page manual sitting today 2 hour moody presentation necessary us information enron counterparties move next step riskcalc obtained information enron european counterparties colleagues london office need colleagues houston office supply us list enron north american counterparties specifically evaluate moody riskcalc need following financial inputs enron north american private firm counterparties fiscal year prior twelve months financial data represented annual statements usable well quarterly statements summing flow variables cost goods sold net income sales ebit value four digit integer year without mention day month 1999 2000 forecasts year 2009 made constant rate inflation applied future years using last year 1999 inflation level general estimation error cause great problems size affects default rates large scales e g 10 000 000 vs 1 000 000 makes significant difference 1 000 000 vs 1 050 00 cash equivalents measure liquid assets includes cash marketable securities inventory inventories taken directly balance sheet thousands dollars without alterations accounting method e g lifo fifo average cost item represents merchandise bought resale materials supplies purchased use production revenue specifically would include purchase cost sales cost sales taxes transportation costs insurance costs storage costs current assets item primarily represents cash inventories accounts receivables marketable securities current assets total assets total assets every variable entered thousands dollars example 15 500 000 entered 15500 specifically total assets sum current assets plus net property plant equipment plus noncurrent assets including intangible assets deferred items investments advances leave previous year total assets blank australian companies current liabilities liabilities positive values included current liabilities short term debt accounts payable current liabilities total liabilities balance sheet account total liabilities positive number representing sum current liabilities plus long term debt plus noncurrent liabilities including deferred taxes investment tax credit minority interest retained earnings retained earnings historical measure performance cumulative earnings company less total dividend distributions shareholders typically prior year retained earnings plus net income less distributions retained earnings generally positive firms low credit quality negative retained earnings leave field blank australian companies sales item consists industry segment gross sales amount actual billings customers regular sales completed period reduced cash discounts trade discounts returned sales allowances credit given customers cost goods sold entered thousands dollars value generally positive number less sales represents costs directly allocated company production material labor overhead fixed overhead items would included selling general administrative expenses leave field blank australian companies ebit earning interest expense operating income depreciation positive negative usually greater net income interest expense item represents periodic expense company securing short long term debt typically expect charge approximately prevailing interest rate times total liabilities one measure computing interest expense 0 07 total liabilities net income item represents income loss reported company expenses losses subtracted revenues gains fiscal period including extraordinary items discontinued operations loss represented negative sign example 5 000 000 loss would entered 5000 leave previous year net income blank australian companies extraordinary items positive negative item represents unusual items sometimes appear income statement items designated company extraordinary presented net income continuing operations discontinued operations items include extraordinary gains losses income loss discontinued operations cumulative affect accounting changes expenses entered negative values gains positive values leave previous year extraordinary items blank australian companies country model calibrated united states canada australia look forward receiving information enron private firm north american counterparties move next step evaluation riskcalc thanks iris