PREFACE 
In the preface to Bulletin No. 9, the first of this series of studies in 
Public Utility ratios, the following statement was made: The useful- 
ness of financial ratios depends somewhat upon the opportunity which 
individual companies have of comparing their own recent ratios with 
other similar ratios as standards. There are two ways in which a 
serviceable “standard” for comparison may be obtained. The individual 
enterprise may calculate ratios for its business over a sufficiently long 
period of time to develop in the minds of its executives an approximate 
“standard” for their own enterprise. On the other hand, the attempt 
may be made to present a reasonable standard figure for the industry 
as a whole so that individuals may compare their own ratios with a 
so-called “standard-of-the-industry” ratio. 
The Bureau is attempting in these studies to derive reasonable 
“standard-of-the-industry” ratios by tabulating data in sufficient quanti- 
ties to permit the determination of modal averages, i. e., averages about 
which the ratios tend to concentrate. These averages may then be used 
as the best available standard ratios. 
The modal averages were calculated by an approximation formula. 
The formula used is: 
I Icx.c 
+ f'c + fc 
where 1 equals lower limit of the modal group 
c equals class interval 
fc equals the frequency of the next higher class interval 
f'c equals the frequency of the next lower class interval. 
To obtain the mode exactly on the basis of given data, arranged as 
a frequency distribution, it is necessary to obtain the frequency curve. 
The highest ordinate of this curve yields the theoretical mode. It was 
felt, however, that for the purposes of this study, the approximated mode 
yields a sufficiently accurate figure to indicate characteristic financial 
ratios. Determinations of the respective modes by both methods dis- 
closed the fact that the approximations yielded results which are quite 
close to the more accurately calculated figures. 
In the present study two ratios are considered, (1) the ratio of 
Gross Revenue to Total Assets, which expresses the productiveness of 
the service-producing investment and, (2) the ratio of Gross Revenue 
135%