Impact of Companies' Financial Condition and Growth Toward Acceptance of Going Concern Audit Opinion: Empirical Study at Company Listed in the Jakarta Islamic Index (JII)

Accounting and Finance Review (AFR) Vol. 2(3) 2017, 1-10

10 Pages Posted: 26 Jul 2017

See all articles by SM Wardayati

SM Wardayati

University of Jember

Agung Budi Sulistiyo

University of Jember - Faculty of Economics

Rahman Junusi

University of Jember

Alamsyah

University of Mataram - Faculty of Economics and Business

Labitsta Untsa

University of Jember - Faculty of Economics

Date Written: July 8, 2017

Abstract

Objective – This study aims to explain the companies' financial condition and growth which is affecting going concern audit opinion of the companies listed in the Jakarta Islamic Index (JII). Financial condition is examined through the information changes in working capital to total assets, retained earnings to total assets, earnings before interest and taxes to total assets, book value of equity to book value of total liabilities, sales to total assets.

Methodology/Technique – This study applies qualitative research with a description method and the populations used are all companies listed in JII period 2014-2015.

Findings – The results of the study explained that the companies' financial conditions affect going concern audit opinion. The worse the financial condition of the company, the greater the probability of companies to receive going concern audit opinion, and vice versa. An auditor will give a going concern audit opinion on companies that are experiencing financial difficulties. The growth of the companies affects going concern audit opinion. If the sales growth is negative, the continuity of the company will be unstable, because the company will be difficult to make profits. It can cause the financial conditions of the company experience difficulties, so that the company will receive going concern audit opinion.

Novelty – The study contributes literature with its empirical findings in the context of Indonesia.

Type of Paper: Empirical.

Keywords: Working Capital to Total Assets; Retained Earnings to Total Assets; Earnings Before Interest and Taxes to Total Assets; Book Value of Equity to Book Value of Total Liabilities; Sales to Total Assets and the Company's Growth.

JEL Classification: M41, M42

Suggested Citation

Wardayati, Siti Maria and Sulistiyo, Agung Budi and Junusi, Rahman and , Alamsyah and Afnany, Labitsta, Impact of Companies' Financial Condition and Growth Toward Acceptance of Going Concern Audit Opinion: Empirical Study at Company Listed in the Jakarta Islamic Index (JII) (July 8, 2017). Accounting and Finance Review (AFR) Vol. 2(3) 2017, 1-10, Available at SSRN: https://ssrn.com/abstract=3008271

Siti Maria Wardayati (Contact Author)

University of Jember ( email )

Jl. Jawa 17
Jember, East Java 68137
Indonesia

Agung Budi Sulistiyo

University of Jember - Faculty of Economics ( email )

Jl Kalimantan No 37
Tegal Boto
Jember, 68121
Indonesia

Rahman Junusi

University of Jember ( email )

Jl. Jawa 17
Jember, East Java 68137
Indonesia

Alamsyah

University of Mataram - Faculty of Economics and Business ( email )

Jalan Majapahit No.62, Gomong, Selaparang, Dasan A
Nusa Tenggara Bar, 83115
Indonesia

Labitsta Afnany

University of Jember - Faculty of Economics ( email )

Jl Kalimantan No 37
Tegal Boto
Jember, 68121
Indonesia

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