The New Role Of The Going Concern Concept In Corporate Finance Management

  • Gintaras Cernius Mykolas Romeris University, Vilnius
Keywords: Corporate Finance, Management Objective, Going Concern

Abstract

This paper tackles different issues related to the development of the system of the objectives of a company's financial management that also includes its sustainability. Prior to the recent financial crisis the formulation of the corporate finance management objective focused only on the company’s finances that were reported and measured using the company's profit and its worth growth ratios. The financial crisis has highlighted an additional aspect in corporate management, i.e., a need for the company, as an object of the owners' investment, to generate the economic benefit for a prolonged period of time. For the purpose of formulation of the corporate financial management objective it is appropriate to refer not to a single objective or a set of same-level objectives; a much more expedient approach is a creation of the so-called objective tree integrating the requirements of the entity's going concern. The present article analyses certain factors affecting the financial performance of a company, discusses different ratios facilitating the quantitative effect of the factors upon the final results, and practically applies the management by interference model with a view to ensuring the operations of the company for a sufficiently long time

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Published
2012-09-01
Section
Articles