7% 7 
- Ee 
50% shrinkage in rubber values at least proved the worth ef budget = 
control of inventory. Merchandising a widely varied list\o®goods, 3 
ordered from an annual distribution of 40,000,000 large aRd small \ ® J 
catalogues to over 8,000,000 customers paying cash in adva e 
95 of 100 transactions, and turning over the inventory now some 
seven times a year, the company is intrenched against ordinary 
troubles. 
STUDIES IN SECURITIES 
Montgomery Ward & Co. common stock offers attractive return 
with a well-protected $4 dividend, plus the promise of an extra 
payment in a good year. It is an equity suitable for investment 
holding. 
National Biscuit Co. 
Co-incident with splitting the stock seven-for-one in December, 
1922, and tripling the common dividend disbursement, National 
Biscuit Co. began reporting earnings double the steady rate shown 
for twenty-four years. Net of $11,025,000 was reported for 1922 
(in which year a 75% stock dividend was paid, par reduced from 
$100 to $25, and the cash dividend rate increased from 7% to 
129%) and this earning capacity was substantiated by a steadily 
increasing net income to $14,674,000 in 1926. 
The contrast with preceding years was extreme. From organiza- 
tion in 1898 (as a merger of going concerns) to 1910, the net 
income as disclosed ranged narrowly between $3,292,000 in 1898 
and $4,101,000 in 1907; and from 1911 to 1921 between $4,130,000 
in 1915 and $5.677.000 in 1921. 
Suddenness of the jump in 1922 probably is explicable not by un- 
usual expansion of business (for National Biscuit has grown grad- 
ually and, incidentally, without borrowing a dollar) but by ac- 
counting income more clearly to reveal earning power. Ultra- 
conservatism has always marked National Biscuit bookkeeping. 
Besides charging extensive plant alteration direct to operating ex- 
pense, the company liberally wrote off outlays for new construe- 
tion and property acquisition. Gross business is not reported reg- 
ularly, but we know that in 1909 $42,700,000 sales were handled 
with plant carried at $53,000,000, while in 1922 sales were at a 
$97,000,000 annual rate with plant valued at only $62,000,000. 
The company now operates 43 plants with close to 200 selling 
branches or agencies so that 90% of the business is done by owned 
equipment delivering to customers’ stores. Inventory turnover 
averages two weeks and receivables represent only about a week’s 
collection. Except for a newly developing output of bread and 
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