Going Concern

Definition

Going concern means that a business is expected to continue operating for the foreseeable future without any plans to close down. It assumes that the company will generate enough money to meet its financial obligations and keep running. This assumption is important for financial reporting and helps stakeholders understand the company’s future prospects and financial stability.

Further Explanation

Going concern refers to the assumption that a business will continue to operate in the foreseeable future without the intention of liquidation or ceasing operations. It is a fundamental principle in accounting and financial reporting that assumes the company will be able to fulfill its financial obligations, continue its operations, and realize its assets’ value.

The going concern assumption assumes that the company will generate sufficient cash flows to meet its financial obligations, maintain its operations, and sustain profitability. It implies that the company has the ability to continue operating and will not be forced to sell off its assets or go out of business in the near term.

When preparing financial statements, the going concern assumption requires management to assess the company’s ability to continue operating for at least one year from the financial statement date. If there are significant doubts about the company’s ability to continue as a going concern, this is disclosed in the financial statements.

The going concern assumption is important because it provides users of financial statements, such as investors, creditors, and stakeholders, with information about the company’s future viability and the reliability of its financial statements. It helps them make informed decisions and understand the financial health and sustainability of the business.

In summary, the going concern assumption is the assumption that a business will continue to operate in the foreseeable future without the intention of liquidation. It implies the company will generate enough cash flows to meet its obligations, sustain operations, and realize the value of its assets. This assumption is crucial for financial reporting and provides stakeholders with confidence in the company’s ongoing operations and financial stability.

Why Appoint Valtech as Valuation Adviser?

Valtech’s team has provided valuation advice to over 200 listed companies in Hong Kong, China, Singapore, Taiwan, Australia, the United Kingdom, the United States and Germany.

Valtech Valuation is a professional valuation firm accredited with ISO-9001 in valuation advisory services. The financial market and valuation requirements are highly dynamic. We are determined to develop and maintain a quality management system to foster an environment which is sustainable and evolving continuously. Our founders stress on development of a system and an environment that our consultants are provided with necessary support and opportunities to thrive.

We are a team of professionals from multiple disciplines including audit, financial modelling, tax, internal control and surveying. Our management adheres professional excellence. Abundant resources are reserved to develop standardized policies and procedures for quality control. We have solid track record in valuation advisory for listed companies, private equity, fund managers and financial institutions. We work closely with big four and other international accounting firms, corporate financial advisors, fund managers and legal advisors.

Valtech Advantages:

Advanced Valuation Techniques: Valtech Valuation can develop and implement advanced valuation techniques that are specifically tailored to the needs of clients. These techniques can go beyond traditional valuation methods and incorporate factors such as market trends, industry benchmarks, and risk analysis to provide more accurate and insightful valuations.

Customized Valuation Models: Valtech Valuation can create customized valuation models that align with the unique investment strategies and asset classes. By understanding the specific requirements and objectives of these entities, Valtech Valuation can develop models that capture the nuances of their portfolios, resulting in more precise and relevant valuations.

Data-driven Insights: Valtech Valuation can leverage its access to comprehensive data sources and analytics tools to provide data-driven insights. By analyzing market data, economic indicators, and performance metrics, Valtech Valuation can offer valuable insights into the valuation of assets, identify emerging trends, and help inform investment decision-making.

Adherence to Compliance and Reporting Standards: Valtech Valuation can ensure that valuation practices adhere to regulatory compliance and reporting standards. By staying updated on relevant regulations, such as accounting standards and industry guidelines, Valtech Valuation can help clients meet their reporting obligations accurately and in a timely manner.