Going Concern versus Gone Concern

From Open Risk Manual

Going Concern versus Gone Concern

A Going Concern is a business that functions on the expectation that an event of bankruptcy / liquidation does not have a significant likelihood in the near future.

A Gone Concern is instead a business that is either already in such a liquidation state or is likely to enter in the near future. The terminology derives from declaration made by financial auditors.

The distinction of Going versus Gone concern is commonly made in the context of assessing the capital structure of a firm, in particular financial services firms. Evaluating capital requirements in the Gone Concern scenario must take into account the possible discount from the sale of illiquid assets on the bank's balance sheet.

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