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Credit Acceptance Corp. Sinks; Accounting Shift to Hit Earnings

Nov. 4, 2019, 3:08 PM

Shares of Credit Acceptance Corp. fell as much as 13% early Nov. 4, the most in three years, after the auto lender on Nov. 1 released its projections for new accounting standards known as CECL and reported third quarter results that were in line with estimates. Trading volume was 1.3 times the daily average.

“Most importantly, CACC released the company’s estimated CECL impact, which is expected to reduce 2020 earnings between 30% and 60%,” BTIG analyst Giuliano Bologna wrote in a note.

And adopting CECL—the current expected credit losses standard—will also inject a “significant amount of volatility” into future...

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