The Consequences of a Going Concern Declaration for a Company

At first glance, says businessman Eitan Eldar, a going concern declaration is simply a declaration that an accountant adds to the financial statements of a company. With this in mind, this small declaration has a great and even destructive influence on a company. The significance of an going concern declaration is that according to the financial obligations of a company in the short term, the expected income and cash balance of the company, it appears that the company can continue to operate for more than one year.

A going concern declaration accounts for a sort of warning to potential investors, for those who have invested their money in the company, for those who have lent money to the company such as bond holders, banks or shareholders – and of course its employees, explains Eitan Eldar.

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