REVENUE 
II. THE NET WORTH RATIO 
In Part I, the ratio of revenue to total assets was analyzed as a 
quantitative measure of the productiveness of total operating invest- 
ment; here it is proposed to study the productiveness controlled by 
ownership capital through the analysis of the ratio of Gross Revenue to 
Net Worth. Since Net Worth includes capital stock, preferred as well as 
common, and undistributed surplus, it represents the stockholders’ inter- 
est, or equity in the corporation. This ratio then expresses the number 
of cents of gross revenue controlled per dollar of stockholder capital. In 
a sense it shows the amount which might presumably be available per 
stockholder-dollar, if there were no operating expenses and fixed charges 
to be deducted. A relatively high ratio indicates that the stockholders’ 
dollar is highly active and will be highly productive if the margin of 
the profits remains unchanged. A low ratio would be a less favorable 
showing. 
THE PRODUCTIVENESS OF OWNERSHIP CAPITAL 
In analyzing the available public utility balance sheets, 1495 cases 
were found where it was possible tocalculate the revenue /net worth ratio. 
In some instances where a deficit existed in place of net worth or where 
the data for some years were not given, no ratio could be calculated. 
Seventy-eight of the total available cases produced a ratio of 1.00 or 
more. These unusual cases will first be briefly characterized and this 
will be followed by the analysis of the 1417 remaining cases which are 
rather regularly distributed between zero and a ratio of one. 
Since a ratio is the quotient obtained by dividing one quantity by 
another, any unusual change in either the dividend (here the revenue) 
or the divisor (here the net worth) without a corresponding change in 
the other quantity will produce a corresponding change in the ratio as 
a quotient. 
By coincidence just one-half of the 78 unusual ratios here presented 
were due to the fact that net worth was below the normal figure shown 
by our other studies, and one-half to the fact that there had been an 
unusual increase in gross revenue or that increases in revenue consist- 
ently ran ahead of increases in net worth. Decreases in net worth pro- 
duced very unusual ratios in some instances. Two cases were, noted for 
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