Firms have stockpiled cash because of the pandemic. Why? What will they most likely use the cash for? Will it flow to investors (dividends, share repurchases)?
Do you think a going concern opinion is a leading indicator of financial viability? Why or why not? If lagging, what is the value of such an opinion?
If you were CFO, how would you set the budget for share repurchases? What factors would you consider? What are the accounting ramifications?
Why do you think increased competition for the rating agencies does not seem to have worked to control what some consider to be inflated ratings for structured securities?
For many years, debt was cheap capital, so many firms loaded up. But, too much of a good thing can make one sick. How much is too much?
What are your thoughts about the “pecking order” of capital and how it may have played a role in the bankruptcy?
How would you decide, if you were CFO, how to allocate the tax savings among competing interests, such as shareholders, workers (and their pension plans), and others?
How would you determine the optimal amount of debt and the appropriate amount of advisory service fee? What are factors other than the debt load that could lead a firm to file Chapter 11?
If you were CFO of Intel, what would you do? What are all your options and how would you try to make a decision about your $10 billion in overseas cash?
Toys R US filed for Chapter 11. Could you have predicted this? What inputs to your predictive model would you have included?
J. Crew needs to modify its debt agreements. What are the two types of modifications, from an accounting perspective? Given the retail sector’s condition in general, do you think they will be successful in achieving a modification? What are the alternatives?
Moody’s downgraded Anglo American’s debt to “junk.” Is there an obligation for firms to give prospective disclosures that would be an advance warning to such potential actions by rating agencies? If not, in your opinion, should there be? Are there indicators in the financial statements? If so, what are they?
Do you agree with the editorial that credit rating reforms will be ineffective? Namely, will greater disclosure about borrowers’ credit ratings reduce the likelihood of another financial crisis? How should credit rating agencies be paid for their ratings?
What exactly is the problem with credit raters from S&P, Moody’s, and Fitch leaving and going to work for firms whose debt they rated? Assuming the problem warrants a change, what do you propose?
