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FerroChina Ltd (FRC SP)

Year: 2008

Chinese steel products manufacturer FerroChina, listed on the Singapore Exchange in 2005. Despite reporting record profits in August 2008, the company suspended trading in October following its default on debts falling due. It was subsequently delisted in March 2010. While there are no official allegations of fraud, rumours have circulated that leverage was much higher than reported. It is not clear if this was due to window dressing or faking profits. FerroChina triggered Beneish's M-Score between FY05 and FY07, owing to deteriorating receivables and a higher level of accruals. This suggests that profits were being brought forward or fabricated. As such, while FerroChia is not a confirmed fraud, it would appear likely.

Last updated January 2021

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