NET EARNINGS IN DISTRICT I
TABLE 100

LL

CORRELATION OF DEVIATIONS OF RATIOS IN PAIRED SERIES—MEMBER
Banks, BosToN FEDERAL RESERVE DISTRICT, 1924 AND 1925
Percentage Deviations from Respective Yearly Averages for the
Respective Volume-Groups. See page 279.)

Position

Abhave

Jelow

INDEPENDENT VARI apLe—Ratios of
Net Earnings to Earning Assets

Distance from Average

--~entar”
Sapsina

we
Inc
mn
nce
lado vv

nc-.
 a inde
2 ~nd 1nder
‘c and under.
~ and over

Average
Yarcentage

Number
of
Bank-Years


D)FPENDENT VARIABLES—
Net Average Percentage

Gross Earnings
 to
Tarning
Assets

Total
Expense
to
Farning
Agsets

enclosed by the vertical parallel lines divides the distribution of
the total expense ratios into two parts. To the left of this space
are shown banks with ratios larger, and to the right those
with ratios smaller than the average. It is apparent that the dots
found in the area to the left tend to be below and that those
to the right tend to be above the diagonal zigzag lines. It is
the area above these lines in which are found net earnings ratios
larger, and in that below them, net earnings ratios smaller than
the average.
In the light of the general tendencies indicated above under
the numbers 1, 2, and 3, further analysis is necessary in order
to determine the relative effect of gross earnings and of total
expense ratios on ratios of net earnings. In making such an
analysis it is desirable to distinguish between tke levels of net
earnings ratios at a given time, and the nature of the change of
these ratios from year to year.
Briefly, and in repetition of what has already been said, the
following propositions respecting the ratios at a given time are
true: