An analysis of T'Jelle bank's misleading financial statements
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by ndvanderhoofven
T'Jelle Bank released their most recent financial statements here: http://www.erepublik.com/en/article/t-jelle-bank-financial-statement-2-8k-gold-profit--1298645/1/20 . While I applaud their excellent performance, the bank uses some unusual financing practices. With a little effort, however, we can decode what they are trying to say.
Deposits. These are listed as 10,699.51. “The value of deposits is determined by dividing the total deposits by 3”. So they are valued at 3566.50. It is totally improper to value them this way, but at least they disclosed it.
ERX value. T'Jelle arbitrarily decided to value this at 3,000. This should be valued at book value, which is apparently zero. It is obviously worth a lot more than this, but you can't just pick a number.
With this background, we can understand what they are trying to say:
T'Jelle Bank Balance Sheet as of April 12, 2010.
Assets:
- Cash (Gold in Vaults) 3,658
- Reserves 4,208
- Loans 3,171
- ERX (est. FMV 3,000) 0
Total Assets: 11,037
Liabilities (deposits): 10,700
Net Worth: 337
When you buy stock in T'Jelle Bank, you are buying a share of the net worth.
BUT, it is clear that the ERX is extremely valuable and that almost all the value of TJB is in the cash flow of ERX. How do you value the cash flow? My thought is that one game month is equivalent to about one year of real life, and that a 10% return per month sounds appropriate. An investment that returns 3,000 gold per month would therefore be worth 30,000. This is slightly less than the 36,000 market value of t'jelle, but is in the same ballpark.
In conclusion, I don't think the TJB stock is overvalued; however, for them to say their org value is 17,604 is misleading.
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I'm not sure I understand.
Does t'Jelle directly invest into erx stock?
Or is its ownership purely proprietary... control of the machinery, including the 1% added to transactions and the spread between the bid and ask?
Do you know any of this from personal experience or just reading the article?
I have no first-hand knowledge. ERX is apparently a partnership between the eUS government (25😵, Max McFarland 2 (25😵, and TJB (50😵. ERX has no stock of its own. The website obviously had a lot of work put into it and if they were paying programmers and database administrators, I could see it costing upwards of $20k real cash to develop. It isn't clear who paid those costs. My point is that 99% of the value of TJB is in its ownership of ERX.
Is any of the "stock" purchased on ERX (or ERepX for that matter) actually an ownership share?
>_< 100 Gold profit daily. 30 days in a month. 100 x 30 = 3000. Not just a random number.
Also, you didn't read the * next to Assets, we only included our major assets...
Is any of the "stock" purchased on ERX (or ERepX for that matter) actually an ownership share?
X2
If t'Jelle's only source of income were the fees charged to run the stock market, then that volume would represent the cash flow: divided by the number of shares gives you cash flow per share, not book value per share. For a bank, cash flow per share will always exceed book value per share, for obvious reasons. These numbers do not match what is posted here:
Deposits: 10,699.51 Gold
Reserves (Gold that can be spent freely): 3,338.64 Gold
t'jelle Bank Value (Holdings, Assets, and Value of Deposits): 17,604.15 Gold
Holdings+Assets: 14,557.99 Gold
Non-Interest Accruing (NIA) Gol😛 3,658.4 Gold
The definition of "reserves" as "gold that can be spent freely" strikes me as a bit odd, since one normally thinks of reserves as money held back to cover deposits. In the Federal Reserve system, this is a set percentage of a bank's deposits. It does appear to me that there is some room for creative accounting, since it is not clear what the "holdings" represent, or how those holdings are valued. If the "holdings" are stocks, ERX has not had sufficient activity in volume to move the price structure much, but the most logical way to do that is based on book value. Book value in an eRep company ought to be a market priced based calculation of inventory plus cash on hand. In other words, it will change every day, but that's okay, because you can factor in other things like risk as part of the analysis. Obviously, since t'Jelle was involved in the WCB (or was it WSB, I don't remember) bailout, then the calculation of book value for a bankrupt insitution is a matter of some concern. I suppose Astrup can claim the 10-1 settlement is all there is too it, but how many creditors actually signed the dotted line on that deal ?
intresting.
voted hard 😉