As we mentioned in the textbook, financial leverage is a double edged
sword. With the COVID-19 lockdowns, the economy slowed dramatically and
the effect on highly leveraged companies was immediate. During 2020, 244 U.S. companies
with liabilities over $50 million filed for bankruptcy. This was a 70
percent increase from 2019, and the most since 2009's 293 filings. In
what may be more telling, during 2019, 62 percent of companies reported
being a net investor. However, by the fall of 2020, only 52 percent of
companies reported being a net investor.
Wednesday, January 13, 2021
COVID-19 Bankruptcies
