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BuLLerin No. 20
increasing, there has been a decrease of the percentage of cases grouped
about the mode. That is, a few of the companies have increased their
surplus and reserves ratio to a greater extent than the typical company.
Consequently, although the modal ratio has increased, the percentage of
concentration has decreased, due to the still greater increase of the
ratios in a few of these companies above the modal average.
SUMMARY OF THE SURPLUS AND RESERVES RATIO
In the United States as a whole the typical utility company has a
Surplus and Reserve item in its balance sheet which constitutes .071 of
its Total Equities. Companies in the Middle West and West have
ratios of .0S, those in the East have a ratio of .07 and those in the
South a ratio of .03. The very low ratio of surplus in the South is
highly representative of the companies on which it is based ; 79 per cent
of the cases were concentrated about the mode in three out of 22 class
intervals.
Typical ratios of Surplus and Reserves for companies of 5-9 mil-
lions and 10-49 millions of equities are .05. Companies with 50 millions
of equities and over have a higher proportion of Total Equities in
Surplus and Reserve, namely, .08. Furthermore, the largest group of
companies shows practically no deficits.
In the analysis by operative function of the companies, the Trac-
tion Companies have the highest modal ratio of 08 (.077) with ap-
proximately .05 for both Gas and Electric, and Holding. However, in
contrast to this is the great percentage of negative ratios in Traction
Companies, wherein 13 per cent of the cases had deficits instead of
surplus.
When analyzed by selected years, the modal ratios are almost con-
stant from 1917 to 1921, ranging from .047 to 051, but in 1924 the
ratio jumped to .077. This large increase in this ratio is easily ac-
counted for by the reaction and recovery of utility company profits
following the decline of business in 1921 and 1922 with its accompany-
ing fall of operating costs due to reduced commodity prices.
