Coronavirus Lesson: Balance Sheets Matter

A deep global recession was unthinkable just a few months ago. Stocks were rising, economies were expanding, and optimism was high.

The novel coronavirus outbreak that originated in China is now spreading globally, and governments are shutting down schools and businesses. As a result, a recession now looks inevitable. U.S. Treasury Secretary Steven Mnuchin reportedly warned some Senators Tuesday that the unemployment rate could surge to 20% due to the pandemic.

When everything's going great, investors care about growth. Earnings growth, sales growth, cash flow growth. Little attention is paid to the balance sheet. Companies aren't rewarded by the stock market for being conservative, keeping debt in check, and piling up cash for a rainy day.

Source Fool.com