TABUNG HAJI
E.S. Shankar: The reserves of an entity are the accumulated profits less losses, dividends and write-offs of any biz entity from the time it started operations.
TH shows the reserves are negative. Basically it means the accumulated losses exceed profits by abt $3 billion.
Yet, they hv been consistently paying dividends? How is this possible? It cannot happen in a Plc or private limited company.
So, they must be using new deposits to pay dividends. TH has very peculiar way of calculating funds available for paying divs. It's not a prudent policy just to keep its depositors happy!
E.S. Shankar: You can also see the window dressing in TH bal sheet. $2.8 billion div is a liabilty coz its due to be paid. Yet its shown as part of depositors funds.
Normally, proposed dividends will be shown under accruals/other creditors and correspondingly deducted from reserves.
The way its presented, it boosts depositors funds (capital) and understates negative reserves!!! This is called window dressing to fool the masses & kampong mak ciks & pak ciks!
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