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 usefulness
 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 quantities
 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 disclosed
 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

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