PNC is in enough bother to call a trading halt on Monday, 8/04/19. I suspect it relates to the method of profit recognition. Check that subforum to appreciate the dither that now reigns amongst PNC holders.
Nobody has responded to my post 37974255 of 03/04/19, where I asked if someone could explain the difference of profit recognition between CCP and PNC via an example.
In the debt buying business, profits are an accounting policy construct, which means management can shift profits forward or backward, as suits their agenda. That is, typically the long-term agenda, because management is not free to chop and change accounting policy. One cannot compare CCP and PNC without understanding the PDL profit recognition that they individually apply. PDL asset valuation is the obverse of the same coin – that is, inflating profits (credits) has the effect of inflating asset values (debits), and vice versa.
Apples are usually bought from producers over a 2-month growing season, and sold over the rest of the year. Would an apple monger recognise profit early (by revaluing inventory), because experience equips him with an accurate knowledge of what spoilage and storage expenses to expect, and what profit he should make, and when? Alternatively, would he recognise the profit only on raising invoices after delivery to his customers? The apple monger could, if it is a small business, even elect to keep his accounts on a cash basis. PDLs are conceptually similar to apples, except the buy-collect cycle is much longer, so time-shifting has greater impact on yearly reported profit.
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