STUDIES IN SECURITIES

I nT aC Te
Pe 2 es ee
Ce gore
Flat oi

a

At 79% Erie’s operating expense ratio presents opportunity for
savings; a 5% reduction would add $4 to common share earnings.
Forecast of Erie earnings, worked out in the interest of Chesapeake
 & Ohio Ry., expects on the common stock as probably to be
increased better than $6.60 share earnings in 1927, $8.10 in 1928,
$9.40 in 1929, $10.60 in 1930, and $12.00 in 1931, assuming $5,304,-000
 annual coal subsidiary dividends or $3.50 a share equivalent.
Controlling stock in Erie is now held in favor of ultimate grouping
with others as in the attempted Nickel Plate merger but an exchange
 of shares or lease is unlikely for the time being.
Resemblance of the present Erie R. R. to the Southern Ry. of a
few years ago is surely not remote. Plenty of traffic, prospect of
carrying it more cheaply, ability to raise new capital for betterments,
 current earnings sufficient for preferred dividend payments,
make Erie stocks attractive for speculation.

General Electric Co.

To an enviable record in fifteen years before, General Electric Co.
added a remarkable showing in the war and the immediately postwar
 period, and in the past four years, 1923-26 of prosperity,
made new records in earning power,
From 1910-15 earnings ranged from 11.10% to 16.25% and the
lowest figure since 1902 was 7.40% in 1908. Cash rate of 8% in
dividends was maintained, supplemented by a 809% distribution
in stock in 1912.
Billings expanded from $90,467,000 in 1914 to $275,758,000 in 1920
and inventories from $29,292,000 to $118,109,000, successfully financed
 by a $37,000,000 increase in stock, $23,000,000 increase in
funded debt, and $45,000,000 bank borrowings. Similar flexibility
was shown in contraction in 1921 when billings decreased 20%,
bank loans were paid off, and 13% earned on the stock. War
profits and prudent financing resulted in $63,000,000 cash and
(fovernment securities at the end of that severe year.
Thus the way was prepared for full participation in the prosperity
of the past four vears. viz:

1926. .
1925. .
1924. .
1923.
1922

Billings
$326,974,000
290,290,000
299,252,000
271,310,000
200.194.000

*Figured on basis of present no par
changed for $100 par value in May, 1926.
{391

Net Income
$46,672,000
38,641,000
39,236,000
33,525,000
26.231.000

*Surplus
per Share
$6.14
5.12
5.28
4.60
3.79

shares of which four were ex-