Final answer:
The plan to sell nonessential assets is not a potential indicator of going concern problems for a client. The correct answer is c. Plan to sell nonessential assets.
Step-by-step explanation:
When assessing potential signs of financial distress for a client, adverse trends in critical financial ratios, the departure of key personnel, and a default on a loan are all conceivable indicators.
However, it's important to note that devising a plan to sell nonessential assets doesn't inherently represent a negative signal.
Instead, strategically divesting nonessential assets can be a proactive measure to enhance liquidity and fortify a company's overall financial standing.
Unlike other indicators that may signify underlying financial challenges, such asset sales can be a deliberate and constructive strategy employed by businesses to improve their financial health.
Consequently, the evaluation of a company's going concern should take into account the nuanced nature of its financial decisions, recognizing that certain actions, like selling nonessential assets, can be a well-considered tactic to strengthen the company's financial resilience.
Hence, the correct answer is c. Plan to sell nonessential assets.