COVID-19 Impact on EBITDA

EBITDA-C CPE = 1

The COVID-19 virus has had a profound effect on the world economy. One important consideration of the pandemic is its impact on a company’s enterprise value. As a result of the coronavirus pandemic, a new financial metric for measuring profitability has emerged – EBITDAC (Earnings Before Interest, Taxes, Depreciation, Amortization, and Coronavirus).

As the coronavirus pandemic spread, the profitability of many organizations was directly or indirectly impacted. Many businesses were forced to close or shelter-in-place. Other entities found it difficult to source material and in turn were unable to fulfill customer orders. Still other companies were unable to pivot to a remote workforce and suffered a decline in revenues.
The addition of the ‘C’ to the traditional EBITDA metric is meant to quantify a company’s losses attributed to the coronavirus pandemic. Examples of potential “coronavirus” adjustments include:
  • Lost revenues and profits
  • Disruptions to workforce (including employee severance or “combat pay” bonuses
  • Lease termination costs
  • Disruptions to supply chain (cost increases, expedited freight, etc.)
  • Declines in efficiency due to remote work environment

This session will evaluate the purpose and use of the EBITDA measurement and the addition of the “C” component due to the coronavirus. We will examine what considerations organization may make when using this metric for merger and acquisition activity or simply management strategy forecasting.
Lesson Objectives
  • Explore the purpose and definition of EBITDA.
  • Examine other measures used in conjunction with EBITDA.
  • Consider the impact of EBITDA prior and post COVID.
  • Identify proper methods to recast your financial information for forecasting purposes.

Field: Auditing
CPE: 1
Delivery Method: Self-Study
Format: Video


Your Instructor


Lynn Fountain
Lynn Fountain

Consultant, CPA, CGMA, CRMA, MBA, Past Chief Audit Executive
Business Consultant, Trainer, Author

Ms. Fountain has over 40 years of experience in the business profession, which includes public and industry accounting and over 20 years within internal and external auditing combined. She is a nationally recognized trainer and speaker and also a published author. She is a subject matter expert and specializes in Internal Audit, Sarbanes-Oxley, Enterprise Risk Management, Fraud, Governance and Compliance. Ms. Fountain has held two Chief Audit Executive positions for international companies. She currently performs consulting for companies on internal audit, risk management, internal controls, SSAE 18, financial reporting and accounting along with performing training. She has also been instrumental in the establishment of ERM, Sarbanes-Oxley and Governance frameworks.

Ms. Fountain has authored a publication for the Institute of Internal Auditors Research Foundation (IIARF) titled “Raise the Red Flag – The Internal Auditors Guide to Fraud Evaluations”. The publication will be released April 20, 2015. In addition, she is authoring a publication for Auerbach on “The Realities of performing the Chief Audit Executive Role”. The publication will be released in the Fall 2015. In addition, she has performed as an adjunct instructor for the School of Business for Grantham University and the School of Business at the University of Kansas.

Ms. Fountain obtained her BSBA from Pittsburg State University and her MBA from Washburn University in Kansas. She has active, current CPA, CGMA, and CRMA credentials.


https://www.lynnfountain.net/


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