Insight & Analysis

Press Release: Moody’s – forward-looking aspects of accounts more useful than EBITDAC during coronavirus crisis

Published: Jun 2020

8th June 2020 – The forward-looking aspects of accounts will be more useful than a heavily adjusted measure of historical performance such as EBITDAC, or earnings before interest, tax, depreciation, amortisation and coronavirus, Moody’s Investors Service said today in a new report.

Newspaper press release

The European Securities and Markets Authority (ESMA) has called for caution regarding any separate presentation in the profit or loss statement of the impact of the COVID-19 pandemic, and has instead encouraged companies to explain the impact of the pandemic on the amounts actually recorded in that statement in a single note to the accounts. The Financial Reporting Council (FRC), which regulates auditors, accountants and actuaries in the UK, has also expressed concern about performance measures that attempt to provide a ‘normalised’ or ‘pro-forma’ result, excluding the estimated effect of the coronavirus.

“The provision of explanatory information is preferable to the introduction of a new metric such as EBITDAC,” said Trevor Pijper, Vice President – Senior Credit Officer. “EBITDAC would, of necessity, have to include a number of hypothetical and highly subjective adjustments for it to conceivably represent a ‘before coronavirus’ scenario,” added Philip Robinson, Vice President – Senior Credit Officer, co-author of the report. “The value of the metric would consequently be open to question.”

To inform its view of the credit quality of European non-financial companies, Moody’s will be paying particular attention to features in the accounts such as:

The directors’ justification for preparing the accounts on a going concern basis, as well as material uncertainties disclosed by the directors that might cast significant doubt upon the entity’s ability to continue as a going concern.

  • The auditor’s response to the directors’ decision to use the going concern basis.
  • Impairment tests, and the related disclosure of estimated future cash flows.
  • Other forward-looking information, including the company’s ability to obtain cash and liquidity in the short-term, manage expenditure and take other actions to ensure its viability.

For more research and insight on the coronavirus (COVID-19) outbreak, please see

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