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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.

Learning Objectives

  • Explore the purpose and definition of EBITDA.
  • Explore and examine other measures used in conjunction with EBITDA.
  • Identify and consider the impact of EBITDA prior and post COVID.
  • Identify proper methods to recast your financial information for forecasting purposes.
Last updated/reviewed: August 24, 2020

Prerequisites

Course Complexity: Intermediate

No advanced preparation or prerequisites are required for this course.

Education Provider Information

Company:
Illumeo, Inc., 75 East Santa Clara St., Suite 1215, San Jose, CA 95113
Contact:
For more information regarding this course, including complaint and cancellation policies, please contact our offices at (408) 400- 3993 or send an e-mail to .
Course Syllabus
INTRODUCTION AND OVERVIEW
  6:15Introduction to COVID-19 Impact on EBITDA: EBITDA-C
  7:38Defining EBITDA
  2:55EBITDA Prior to COVID
  4:23Other Measures
  10:56Why EBITDA-C
  10:57EBITDA and Recasting During COVID Times
  9:12Recasting Continued
  5:03Analyst Criticism on EBITDA-C
  6:13Summary
CONTINUOUS PLAY
  1:03:32COVID-19 Impact on EBITDA: EBITDA-C
SUPPORTING MATERIAL
  PDFSlides: COVID-19 Impact on EBITDA
  PDFCOVID-19 Impact on EBITDA Glossary/ Index
REVIEW AND TEST
  quizREVIEW QUESTIONS
 examFINAL EXAM