What are the potential impacts of the COVID-19 pandemic on the first quarter 2020 earnings reports of US companies? And what will those impacts mean for investors and firms across the globe?
Sandy Peters, CPA, CFA, considers the various implications in this in-depth series.
A plethora of non-GAAP and alternative performance measures will arise throughout 2020 to explain the effects of the COVID-19 pandemic. Investors need to critically evaluate the nature of the adjustments, what the resulting measure is meant to communicate, why the new or revised measure is being presented by management, and why the measure is a better or more meaningful measure. This information should be used as a jumping-off point for a conversation with management.
Due to the impact of COVID-19 on how companies are reporting during the second quarter/half year, investors likely need to perform their own going concern analysis.
The second quarter, ending June 30, will result in US companies providing investors with the first look at the actual impact of COVID-19 on US public companies; and globally, companies will release their half-yearly results for the first time since the global surge in the pandemic.
Despite the best efforts of Congress, the big banks retained the new impairment model, the Cumulative Expected Credit Loss (CECL) model. CECL survives politics and is the story of first-quarter earnings.
US quarterly reporting obligation will provide global investors with decision-useful information on impacts of COVID-19.
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