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Wouldn't the best case scenario be all the missed revenue in march-may are simply deferred to the following months? Of course, for a lot of business that's sim

Wouldn't the best case scenario be all the missed revenue in march-may are simply deferred to the following months? Of course, for a lot of business that's simply not possible (they were already at capacity), and for the rest that's very unlikely, but it seems possible for some very specific industries.

caseysoftware 6y ago
Maybe but I've been struggling to think of a business - let alone an industry - that applies to. Restaurants? No, those meals are gone. Oil changes? No, you've driven less miles. Haircuts? You're not going to get two to celebrate. Clothing? Maybe.. because things are still wearing out. Travel? Nope. Technology? Maybe. Durable goods and appliances? More likely. What are you thinking of?
- Leherenn 6y ago
  Durable goods and appliances as you said, and regular maintenance. If you need to have something inspected once a year, then you might have been able to postpone it some, but you'll need to do it eventually. Also travel is not so clear. I realise I am quite lucky, but my bottleneck for travel is vacation days. I will still go on holidays the same amount of time this year, but it might be in a different place than expected if the borders do not reopen. But yes, it certainly does not apply to the majority of businesses.
donavanm 6y ago
Companies are already doing this with “EBITDAC”, appending “...Corona.” Using estimated earnings/sales, or simply substituting Q3/Q4 last year for this years Q1/Q2 earnings. The cited motivation that Ive seen has been between counterparties and covenants around debt. Companies need lending to survive. But the immediate business performance would cause an immediate breach of covenants or terms, forcing actions like margin calls or liquidation. That would leave both lender and company worse off. So instead they agree to substitute in some plausible values with the expectation that business will return to “normal” sooner or later, inside the lifetime of said contract. I havent seen anyone actually posit that revenue/earnings/profit are actually going to fully return immediately, nor that theyll capture that “deferred” business. As always matt levine had a good take on this last week.

caseysoftware 6y ago

Maybe but I've been struggling to think of a business - let alone an industry - that applies to. Restaurants? No, those meals are gone. Oil changes? No, you've driven less miles. Haircuts? You're not going to get two to celebrate. Clothing? Maybe.. because things are still wearing out. Travel? Nope. Technology? Maybe. Durable goods and appliances? More likely. What are you thinking of?

Leherenn 6y ago
Durable goods and appliances as you said, and regular maintenance. If you need to have something inspected once a year, then you might have been able to postpone it some, but you'll need to do it eventually. Also travel is not so clear. I realise I am quite lucky, but my bottleneck for travel is vacation days. I will still go on holidays the same amount of time this year, but it might be in a different place than expected if the borders do not reopen. But yes, it certainly does not apply to the majority of businesses.

donavanm 6y ago

Companies are already doing this with “EBITDAC”, appending “...Corona.” Using estimated earnings/sales, or simply substituting Q3/Q4 last year for this years Q1/Q2 earnings. The cited motivation that Ive seen has been between counterparties and covenants around debt. Companies need lending to survive. But the immediate business performance would cause an immediate breach of covenants or terms, forcing actions like margin calls or liquidation. That would leave both lender and company worse off. So instead they agree to substitute in some plausible values with the expectation that business will return to “normal” sooner or later, inside the lifetime of said contract. I havent seen anyone actually posit that revenue/earnings/profit are actually going to fully return immediately, nor that theyll capture that “deferred” business. As always matt levine had a good take on this last week.