The following are examples of events or conditions that, individually or collectively, may cast significant doubt about the going concern assumption.
This listing is not all-inclusive nor does the existence of one or more of the items always signify that a material uncertainty exists.
- Net liability or net current liability position.
- Fixed-term borrowings approaching maturity without realistic prospects of renewal or repayment.
- Indications of withdrawal of financial support by creditors.
- Negative operating cash flows.
- Adverse key financial ratios.
- Substantial operating losses.
- Discontinuance of dividend payments.
- Inability to pay creditors on due dates.
- Inability to comply with the terms of loan agreements.
- Change from credit to cash-on-delivery transactions with suppliers.
- Management intentions to liquidate the entity.
- Loss of key management without replacement.
- Loss of a major market, key customers, franchise, license, or principal suppliers.
- Labor difficulties.
- Shortages of important supplies.
- Emergence of a highly successful competitor.
- Non-compliance with statutory requirements.
- Pending legal or regulatory proceedings against the entity leading to legal claims.
- Changes in law expected to adversely affect the entity.
- Uninsured or underinsured catastrophes when they occur.