A local politician is spreading demeaning comments about a company that has its accounts done using a “going concern” basis.

My understanding is that this just means that it is assumed that the company can continue to be solvent for the foreseeable future. Investopedia seems to back this up.

However, the politician keeps insisting that a company whose accounts are done with this assumption is in trouble, according to the SEC. I’ve tried googling, but my google-fu fails me.

Can anyone clarify why a “going concern” basis might be a bad thing?

  • Not easy to say without much more context. Perhaps the politician is claiming that the company has actually made a decision to to close down operations at some point in the near future, but still continues to value its capital assets by going-concern principles such that its financial reports look more optimistic than they ought to? – Henning Makholm Sep 22 '18 at 23:23
  • @HenningMakholm The company just listed on the NYSE. It is in no such danger. – Peter K. Sep 22 '18 at 23:36
  • 2
    Would it be possible to post a quote of the exact wording? You can leave out the name of the politician and the wider textual context etc (no intent to defame). – Lawrence Sep 23 '18 at 0:04

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Browse other questions tagged or ask your own question.