In secondary school, James Ene Henshaw’s “Jewels of the Shrine” was a memorable and intriguing book . Mr Okorie was looking for how to engineer a great burial for himself even though he did not have means stored for that. He tricked his two grandsons who never really liked him because they felt that he was a relic of the past.
He created an illusion that he was loaded with wealth which they could inherit. But only the person who could muster a great burial for him will get the goodies – and the key to his long lost heirloom. He designed an illusive rivalry system which ended up making the grandsons deliver a superb burial for him. But when they checked for the thrones, they discovered that grandpa had tricked them to give him a great burial. The man had nothing, factually!
That takes me to Nigeria where banks are declaring record profits and manufacturing companies are declaring record losses: “In its fiscal year 2023 performance report, Cadbury Nigeria Plc, a prominent multinational corporation operating in Nigeria, disclosed a substantial loss of N27.63 billion. This marked a significant downturn, representing a staggering 2,228% decline from the N1.30 billion pre-tax profit recorded in the previous fiscal year.”
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Who is tricking who in Nigeria’s economy?
Summary:
Ndubuisi reflects on James Ene Henshaw's "Jewels of the Shrine" and draws parallels with Nigeria's economic situation, questioning the discrepancy between banks declaring record profits and manufacturing companies, like Cadbury Nigeria Plc, experiencing significant…
— Summarize (@summarizest) January 27, 2024
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Comment 1: Whenever you see stats like that though alarm bells must go off! What potential sneaky trickery lies within their financial statements and MD&A reports? What did they do? Did they change amortisation schedules? Did they right down some assets? Did they fool around with unearned revenue accounts? Unscheduled goodwill?
Financial report analysis is a skill that takes not only mathematical aptitude but some general business sense and experience and some basic common sense. Always look at the numbers with a doubting eye and examine what lies beneath the facade of numbers. The truth is often stated within the MD&A reports so take those and examine them while looking at the financial statements. Often times, trickery lies beneath the numbers.
My response: Actually, it is not complicated. I have made that point before. A bank with assets of $20m in the UK or New York can book a virtual profit of N12 billion between Jan 1 and Dec 31 2023 (delta of N415 to N1,000 per $ today). But a foreign manufacturer bringing raw materials can also book a reverse. So, Cadbury could be making profit on N415/$ but could switch to losses on N1,000 purely on FX. If they imported say $30m worth of items, multiply that by N600, you will see those losses are possible.
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