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Cheap crystal balls

The FRC has demanded that Plc directors take a view on the viability of their businesses. Jon Moulton muses on the silly stuff that is the result.

For accounting periods starting since October 2014, the FRC has pronounced: “Companies should state whether they believe they will be able to continue in operation and meet their liabilities taking account of their current position and principal risks, and specify the period covered by this statement and why they consider it appropriate”

Two years on, and ‘suitably compliant’ accounts are now being published. As yet I have not seen any estimates of solvent life less than a couple of years, and nothing over five years. Now if it were truly the case that this narrow range was a realistic estimate of the survival period of these companies, then the Stock Market would be going downhill quicker than an England football team manager’s job prospects.

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