MUCH IMPROVED

NZ Truth, Issue 1211, 14 February 1929, Page 9

MUCH IMPROVED

Suggestions That Led To Better Business COMMON SHELTON, LTD. (By "Fiat Lux") ~ In dealing with this firm's accounts in' September, 1927, the writer took the gloves off, and whilst taxing 1 the management with sins of omission and commission also offered considerable constructive criticism. The 1928 accounts show improvement m every direction and the accounts are now reasonably intelligible. .

IN the first place the company's earn- ' ings moved up from £32,603 m 1927 to £33,227 m 1928, an improvement of £624. Not a very big move, certainly, but one which is particularly meritorious when the difficult times then experienced m commercial circles is taken into account. The next improvement lies m the expenses, which, m 1927, amounted to £32,978, but m 1928 these came down by £2103. What portion of this was saved m working expenses, and what portion was saved m taxes and bad debts, is known only to the management. But the cardinal point is that it was a saving to the company, and with 1 the increase m earnings the result for the year was the handsome increase of £2727. The declared net profit for the year was £2352, and on account of the strong position of the company it was decided to. declare a six per cent, dividend, which called for £4271, the difference being taken from profits accumulated m past years. Coming to the balance-sheet, the company is shown to be m a very strong position, its liquid position.disclosing a surplus of £22,937, an improvement on the year of £3730. Its paid-up capital is still £71,193, the greater part of which was credited from reserves m 1921. In addition, the shareholders are still carrying- a liability of £71,193 for uncalled capital, -and this, of course, is a very useful asset for the company to pledge. Compared with the 1927 year, reserves at £9048 show a reduction of £1532, which was the net loss on 1927 and was wiped out by a transfer from reserve. Next year's accounts will show a further reduction of £1919, being the amount necessary to make up the 1928 dividend. Creditors, depositors and bank overdraft combined show. -the very substan-

tial reduction of £21,547 on the year. Most of this has been provided by reductions m back-debts and m stock m hand. Stocks have gone down by £6983, and now 'amount to £43,014, whilst book debts at £59,225 are down by £11,206. The lay-out of the accounts has been improved considerably by the addition of a lot of detail which cannot helo but inspire confidence m the undertaking. This writer is very happy to iind that the directors so readily acceded to the suggestions put forth m these j columns in' this connection. ' i \ There is just one further point regarding the profit and loss account, and that is that bad debts should al- ! ways be shown as a separate item, since the amount does not vary m direct ratio to the gross profits m the same way as do salaries and other similar expenses. Although this writer does not approve of the principle of paying divir dends out of reserves, circumstances m this case fully warranted the action taken, and "Fiat Lux" believes this concern sliould continue to pay dividends regularly m the future, thus restoring interest m its shares.