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Definition

A profitable business which is expected to be able to continue in business because it has sufficient cash-flow to meet its commitments. It is not uncommon to find a "going concern" statement in which the directors state that they have examined the company's expected future payments and that they can be met out of its expected future incomes. For example, Grand Parade Investments (GPL) included the following Going Concern statement in the financial statements for period to 31st December 2023: "These Annual Financial Statements have been prepared on the going concern basis. The Board has performed a review of the Group’s ability to continue trading as a going concern in the foreseeable future and based on this review, consider that the presentation of the financial statements on this basis is appropriate. There is no pending or threatened legal or arbitration proceedings which have had or may have a material effect on the financial position of the Group." Clearly, the objective is to give shareholders and potential shareholders the assurance that the business will not fall into liquidation, in their opinion.

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