I. THE RATIO OF LONG TERM DEBT TO 
TOTAL EQUITIES 
A good indication of the stability of the utility industry is found 
in the large funded debt appearing in the ordinary public utility com- 
pany’s financial statement. The utility industry is an industry using 
large fixed assets and having relatively stable earnings. To a great 
extent, it is these two factors which make possible the load of long 
term obligations. 
In the following pages, the proportion of the total equities which 
is provided by this type of financing is discussed with the aid of bar 
charts showing the concentration of the ratios about certain average 
figures. The height of these bars is proportional to the number of 
cases in the groups, thereby showing at which point the greatest con- 
centration of cases takes place. An average figure, representative of 
the greatest number of cases in the distribution, is then calculated and 
is used as an aid to discussion. This average, which is representative 
of a greater number of cases than any other average, is the mode. 
Out of a total of 1,581 cases examined, 110 had no ratios of long 
term debt, 4 had a ratio of less than .02, and 20 had a ratio of over .80.2 
The remaining 1,447 cases, shown in Chart la, have been grouped in 6 
per cent intervals, beginning with .02. The type of the distribution 
is of interest in that it indicates that there is a fairly uniform dis- 
tribution of cases in the four highest bars. 
The highest bar contains 15 per cent of all the cases, which means 
that 15 per cent of all the cases had a ratio between 44 and 499. The 
mode (average) is located in this bar, being .481. The degree to which 
this average is typical of the cases analyzed can be further measured 
by the percentage of cases concentrated about the mode in the three 
highest bars. which. for this distribution. is 44 per cent. 
THE GEOGRAPHICAL DISTRIBUTIONS 
Distributions of the data for those companies in the East, Middle 
West, West, and South are shown graphically in Chart 1b. Differences 
are at once apparent in the spread and height of the distributions 
— 
Preferred stock was classified as a long term debt in those few cases 
where it was preferred both as to assets and dividends. cumulative, and non- 
voting, 
‘The cases in the class interval containing the mode and the cases in the 
‘wo class intervals immediately adjacent to the modal interval are included in 
his percentage. In the following tables the three class intervals are included 
for each distribution. 
°For the basis of these geographical divisions see Bulletin No. 9, The Cur- 
ent Ratio in Public Utility Companies, Bureau of Business Research, University 
01 Tilinois.