The financial productivity of public utility companies

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Monograph

Identifikator:: 1729044344

URN:: urn:nbn:de:zbw-retromon-106690

Document type:: Monograph

Title:: The financial productivity of public utility companies

Place of publication:: Urbana

Publisher:: University of Illinois

Year of publication:: 1926

Scope:: 32 Seiten; Illustrationen

Digitisation:: 2020

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: I. The revenue total assets ratio

Collection:: Economics Books

REVENUE 1 THE TOTAL ASSETS RATIO The term “productivity” is used in the above title to indicate capacity to produce revenue by the sale of service. For the present purposes security investments and income from securities have been eliminated from the financial statements in the process of standardizing the classification so that the figures used show operating results only. Two ratios are selected as particularly fitted to picture this revenue producing capacity. The first one is the ratio of Gross Revenue to Total Assets and expresses the number of cents of annual gross revenue per dollar of total assets invested at the end of the year. It shows the financial productiveness of the service producing (i. e., op- erating assets) investment. The ratio may be stated in cents per dollar as, $.164 per $1, or may be cast into the form of a percentage by moving the decimal point as, 16.4 (i. e., 16% cents per dollar). The latter form 1s the one generally used throughout the bulletin. A relatively large ratio, such as .18 or .20 for example would indicate that a highly efficient use of the assets was producing a large return for each dollar invested. Conversely a low ratio like .02 or .06 would indicate over-investment in plan or inefficient operating conditions. The second of the two ratios to be analyzed is the ratio of Gross Revenue to Net Worth which will be examined in Part II of this bulle- tin. Tables for a third ratio, Gross Revenue to Fixed Assets are included in the Appendix for reference, but are not discussed in the text because these ratios are so nearly like the ratios of revenue to total assets. In general, the procedure will be to analyze the two ratios sepa- rately, supporting the analysis by suitable tables in an appendix and by bar-charts accompanying the text. The tables are constructed to show “frequency distributions,” that is to say, to show the way the hundreds of ratios fall into groups. In the charts each vertical bar represents a ratio-group, as for example, the ratios which fall between .12 and .16; the length of the bars gives a relative measure of the number of cases which fall in each group. In order to secure greater ease in making quantitative comparisons, the number of cases in each ratio- University of Illinois, Bureau of Business Research Bulletin No. 9—The Current Ratio in Public Utility Companies contains further notes in regard to the standardiza- tion of financial statements preliminary to statistical analysis. {5.9

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