IV. THE RATIO OF SURPLUS AND RESERVES TO 
TOTAL EQUITIES 
The utility industry has ordinarily not built up substantial sur- 
pluses such as are found in the industrial enterprises. This is largely 
attributable to differences in methods of public utility financing, where- 
by the stockholders usually do not supply more than fifty per cent of 
the capital, to the slow turnover of the utility capital, and to the public 
regulation of rates. Yet the study of the ratio of Surplus and Re- 
serves to Total Equities is of interest as it shows to what extent ex- 
pansion has taken place through reinvestment of earnings. A tabu- 
lation of the ratios gives: 
Cases without any ratio. ...... 1 
Cases with deficits (negative ratios). . veowesnene 100 
Cases with surplus (positive ratios) ............... . 1,480 
Total cases examined (1915-1924) ..  ..  . .... 1.581 
Chart 4a shows graphically the frequency distribution of 1,542 of 
these cases. Of the 100 negative ratios listed, 24 were omitted from 
the chart and tables, because they were widely scattered beyond a ratio 
of —.21, the lower limit of the chart, For the same reason 14 ratios 
were omitted from the upper limits of the chart. 
The chart shows the few scattered cases with deficits, and the high 
concentration of cases having ratios ranging from 00 to .12. The 
shortening of the bars for the negative ratios to the left of the zero is 
abrupt, whereas the decrease of the bars to the right (the positive 
ratios) is gradual and regular. 
Because of the high concentration of cases in the positive ratios 
ranging from 00 to .12, the mode is 071; i.e. instead of being located 
in the highest bar, .03-.059, it has been located in the next bar to the 
right, .06-.079, which is the truer center of the greatest concentration 
of cases. The degree to which this ratio of .071 is typical is evident 
from the high concentration of 47 per cent of the cases in three bars 
(the modal bar and the adjoining bar on each side) out of the total 
number of 22 bars. Although 7 out of 22 of the class intervals con- 
tain deficits (negative ratios) only 4.9 per cent of the cases are located 
in these seven intervals 
DISTRIBUTIONS BY GEOGRAPHICAL LOCATION 
A study of Chart 4b shows widely divergent types of distributions 
for those companies located in different sections of the United States.