), Neualtenburg is a non-for-profit cooperative organization. What that means on the money side is that our financial information is public.Today, June 30, is the last day of the first full month of Neualtenburg operation. Since I'm serving as "Treasurer" (and I put that in quotes because there was never designated any official title, something perhaps the RA can attend to in a future meeting. We did decide, however, that the term should be one year), I am issuing the first monthly financial report for the city. The basic documents are on my website.
There are two reports which we use to describe the financial situation of a company, and I thought I would take a bit of time this first month to provide a little help for those folks who might be inclined to read and understand them.
The reports are, for better or worse, standard accounting reports. I say "for better" because to put them in a standard form means that Neualtenburg can stand beside any other company or institution in the world and describe itself financially in a meaningful way. In short, financially speaking, we're real. I say "for worse" because accounting reports, and, in fact, the whole system of accounting, is ultimately understood only by accountants. Us mortal folk can only get a glimmer of meaning out of them.
So, I thought I'd try to describe these first reports a bit more than I will do in the future. I'll try and post the reports at least every month; more if it seems suitable. If anyone has any questions, please feel free to ask.
The first report is the Balance Sheet. It's here:
http://www.tospitimou.com/Neualtenburg/BalanceSheet.pdf
The Balance Sheet is basically a statement of everything we own and everything we owe. The basic info is like this:
List of Everything We Own (called Assets)
minus List of Everything We Owe (called Liabilities)
equals Value of the Company (called Equity)(also called, more helpfully, Net Worth)
Well, looking at the Balance Sheet, you see that the Assets (everything we own) is 188,691 Linden$ (everything in our financial reports is in lindens, cause that's the currency of the land. US$ are a "foreign currency"
.You'll also see that the Liabilities (everything we owe) is 288,025 L$. If you subtract the two, that results in a Net Worth of -99,334 L$. (That's a minus).
Ahhh. That's bad. Companys should not have a negative Net Worth. It basically means that we owe more than we own. What happened is that at the beginning of Neualtenburg Phase Two, a number of helpful folks loaned money to Neualtenburg to help it get started. That money is listed in the lines starting with "Bonds Account". Its money that the City owes.
Then, of course, that money was used to buy the private island which is Neualtenburg. You'll see that amount, 246,235 L$ in the line called "Land Purchased from the Lindens". After that, during this month, some of that land has been sold back to the citizens. So the land owned by the City Of Neualtenburg has been lessened. Thats' why you'll see negative amounts in the lines called "Land Sold in L$" and "Land Sold in US$".
The "Cash" of the City is called "Current Assets" on the Balance Sheet. In "Current Assets" you'll see our four "bank" accounts listed. They are:
City Avatar: Uma Bauhaus (alt of Ulrika)
Treasurer Avatar: Rudeen Edo (alt of Sudane)
GOM Account: exactly what it says, so we can exchange currencies
Paypal Dollar Account: The Neualtenburg Paypal account
Add up the money in those four accounts ( 69,730 L$ ) and you get the total amount of cash that Neualtenburg has at this moment.
So, we've got two interesting facts. Neualtenburg owes more than it owns, by 99,000 L$, and its got 69,000 L$ in the bank. Why not pay down the 99,000 with the 67,000, so that we'll have less debt?
Not so easy. The Lindens want 49,000 L$ from us each month, so part of managing cash is making sure that the money is there in the bank when they grab it. I'll certainly be leaving that money in the bank(s), and hoping for more
.The only way to solve the problem of how to make Neualtenburg a healthy financial organization is to "make money". That means, obviously, have more Income than Expenses. And, that brings us to the other financial report, what they call the "Income Statement", but which is really an "Income and Expense Statement". Here:
http://www.tospitimou.com/Neualtenburg/IncomeExpense.pdf
Here you'll have to forgive me a moment, cause this next fact sounds completely mysterious and illogical. All the money we've been talking about so far, the money shown on the Balance Sheet, none of it is Income or Expense. (If you must know exactly why, I'll explain it in person to you sometime. It's accounting esoterica.)
Real Income and Expense, as listed on this report, is what's going to make Neualtenburg a healthy organization. Our biggest income source will be the monthly fees that the citizens pay to the City, called "Land Tier Revenues" on the report. But for June, you'll see only a tiny number there, some folks who've pre-paid their July fees, because we haven't started collecting them yet.
Actually, this report is called a "Comparative Income Statement" because it lists the income and expense for both the month of June, and also for the whole year so far.
So, you can see that we've already paid a big amount of expense in "Linden Land Tier Payment", but that there's been very little income to pay for that. So, for the month of June, Neualtenburg "lost" 47,685 L$. It's called "Net Income" on the report.
That "Net Income" carries over to the Balance Sheet, where it made our "Net Worth" worse by that amount. That's how the two reports relate.
The project which faces all of us is to create the conditions for positive "Net Income", as shown on the "Income Statement" in upcoming months. When we make a positive net Income, that carries over to the Balance Sheet, and it causes the Net Worth to go up by that much.
Each month may not be a lot. But if each month the Net Income is positive by even a small amount, that means the Balance Sheet is improving, and hopefully someday will be positive. That way, those who have loaned money to the city can be repaid, or if they wish, they can leave their money in the city to earn interest. As Neualtenburg manages to build up healthy financial accounts, it means we have the strength to grow; to expand our ideas to new projects.
Finally, on the simplest level, since the monthly land fees are the biggest source of income right now, and the Linden land payment the biggest expense, the issue we're all watching is to see when there are enough citizens to pay monthly fees equal to or greater than the Linden payment. On the Land Report, here:
http://www.tospitimou.com/Neualtenburg/NeualtenburgLandJournal.pdf
you can see that we're getting close, but not there yet. The chart shows US$ 145.43 of committed monthly fees, still US$ 50 short of what we need to break even. Starting tomorrow, July 1, I'll send out reminder notices about paying your monthly amounts. As folks pay that, we'll see how accurate the charts have been.
Sorry for the extremely long post. It may do little to shed light on all this. But I feel people should be given a chance to understand their own finances. Please ask me if anything is not clear. And, perhaps, I'll try and make a small report at RA meetings about our money, once we have something to report.
Sudane
