Companies in certain industries received more auditor warnings about their ability to stay afloat over the past year, compared with the previous period, as the coronavirus pandemic put finance chiefs and balance sheets under pressure, the Wall Street Journal reported. These warnings, also called going-concern opinions, are published in the annual reports of public companies and refer to their likelihood to remain in business for the next 12 months. Executives in the spring of 2020 rushed to preserve liquidity, often by slashing jobs, cutting costs, and halting dividends and share repurchases. Some industries — such as e-commerce, technology and food retail — managed to navigate lockdown orders and restrictions, while others, including airlines and oil companies, suffered big losses. Recurring losses, alongside issues such as negative cash flow and inability to pay suppliers, usually trigger going-concern opinions. Rental-car company Hertz Global Holdings Inc., restaurant and entertainment firm Dave & Buster’s Entertainment Inc. and cruise operator Norwegian Cruise Line Holdings Ltd. were among the companies that issued such notices last year. Hertz filed for bankruptcy about two weeks after disclosing a warning, but Dave & Buster’s and Norwegian didn’t. Truck startup Lordstown Motors Corp. earlier this month said it might not have enough cash to start production, which triggered a management reshuffle. Even though going-concern filings at U.S. public companies overall declined during the 12 months ended May 31, they rose in certain industries, such as real estate and transportation.
