Ann: COVID-19 - Credit Corp withdraws FY20 guidance, page-49

I am not a holder of CCP but I am a holder of PNC and have been a past holder of CLH both of which are in all sorts of trouble due to the change in accounting standards and new reporting requirements. I do agree with you that looking at the balance sheet does not help much in analysing these sorts of businesses. But I would correct you in that the balance sheet shopuld be showing the PDPs at fair value based on their modelling and discount rates and not full value. I agree that checking the cash flow is the best way of gaining some insight as to their solvency and profitability. However while they may appear to burning cash all they have to do to raise considerable cash quickly is stop buying PDPs, or reduce the rate of expansion of their PDP portfolio. The cash they are burning is tied up in ever increasing PDP purchases if they are expanding their business - slow them down and they immediately show profits. There is one other change which can quickly affect there ability to show profit and that is if they have a change of strategy and ease the pressure on their collection methods. This elongates the payment periods and reduces the rate of acsh coming in and causes considerable change in the present value of their PDP portfolio. Reason being the longer you extend a return on your money the less discounted present value it has. These types of companies are very hard to understand accounting-wise and the new standards have made it even harder and more complicated. I think that the lenders to them are even wary of the accounting and how they look on the surface. All IMO DYOR - I am only commenting because I was checking all PDP companies and making comparisons based on the state of CLH and PNC in the current market. Something is wrong with the industry, the accounting standards and the assessment of them by their lenders in my view. Rubbish my view if you like but I have had a career in it (albeit 30 years ago) and have watched it change over those years. .