What are possible indications of going concern problems?

1.
When one of the partners files a petition for the dissolution of the business.
2.
When one or more creditors file a case against the business, and the court issue the decree of its bankruptcy.
3.
when a business fails to meet its fixed cost, ie a situation of shut down point in technical terms, 4.
In case of serious violation of either pubic interest or government rules, the court itself declares the business bankrupt.

1- Deteriorating liquidity position of a company not backed by sufficient financing arrangements.

2- High financial risk arising from increased gearing level rendering the company vulnerable to delays in payment of interest and loan principle.

3- Significant trading losses bieng incurred for several years.
Profitability of a company is essential for its survival in the long term.

4- Aggressive growth strategy not backed by sufficient finance which ultimately leads to over trading.

5- Inability of the company to maintain liquidity ratios as defined in the loan covenants.

6- Serious litigations faced by a company which does not have the financial strength to pay the possible settlement.

7- Bankruptcy of a major customer of the company.

•Deteriorating liquidity position of a company not backed by sufficient financing arrangements.
•High financial risk arising from increased gearing level rendering the company vulnerable to delays in payment of interest and loan principle.
•Significant trading losses bieng incurred for several years.
Profitability of a company is essential for its survival in the long term.
•Aggressive growth strategy not backed by sufficient finance which ultimately leads to over trading.
•Increasing level of short term borrowing and overdraft not supported by increase in business.
•Inability of the company to maintain liquidity ratios as defined in the loan covenants.
•Serious litigations faced by a company which does not have the financial strength to pay the possible settlement.
•Inability of a company to develop a new range of commercially successful products.
Innovation is often said to be the key to the long-term stability of any company.
• Bankruptcy of a major customer of the company.

Going concern is one the fundamental assumptions in accounting on the basis of which financial statements are prepared. Financial statements are prepared assuming that a business entity will continue to operate in the foreseeable future without the need or intention on the part of management to liquidate the entity or to significantly curtail its operational activities.

Possible indications

Deteriorating liquidity position of a company not backed by sufficient financing arrangements.

High financial risk arising from increased gearing level rendering the company vulnerable to delays in payment of interest and loan principle.

Significant trading losses bieng incurred for several years. Profitability of a company is essential for its survival in the long term.

Aggressive growth strategy not backed by sufficient finance which ultimately leads to over trading.

Increasing level of short term borrowing and overdraft not supported by increase in business.

Inability of the company to maintain liquidity ratios as defined in the loan covenants.

Serious litigations faced by a company which does not have the financial strength to pay the possible settlement.

Inability of a company to develop a new range of commercially successful products.

Innovation is often said to be the key to the long-term stability of any company.

Bankruptcy of a major customer of the company.