FIN611 GDB Solution Spring 2017

Discussion Question:

The domestic electronics market has been witnessing a replacement of the conventional TVs with Smart TVs and LEDs. Due to this reason, a national company – ZEE Electronics has decided to enter into export business with third world markets having potential for conventional TV sets. The old financial statements of the ZEE have been showing after tax losses and negative net working capital since the year 2010. Yet, Zee managed to stay in the business. Now a day, owing to the government’s huge recent relief for the electronics industry, the company is projecting good profits from its exports in the days to come. Furthermore, ZEE is also expecting to arrange additional financial resources to meet its working capital needs and future expansions. Considering these facts, argue in favor and against the application of “going concern” assumption with reference to the financial statements prepared by ZEE.