ACCOUNTS, MEMORANDA AND TABLES, l6l 



them at the end of the next month or quarter, before one 

 can really guarantee correctness and satisfactory working. 



The annual turnover (total of revenue) should not be 

 less than one-fourth of the capital expenditure. Some- 

 times it happens that a large outlay is made during the 

 current year, the benefit of which is not apparent till the 

 following year, and in any case the full benefit of the current 

 year's expenditure is not experienced. But in the ordinary 

 way the current year's capital expenditure has been 

 moderate, and the rule holds good. Then the balance 

 carried to profit and loss should be 25 to 30 per cent, of 

 the annual turnover. The total of the balance-sheet should 

 not exceed half the annual turnover. A reasonable sum, 

 at least 2 per cent, on the capital outlay, should have been 

 expended on repairs and renewals, and it is necessary to 

 ascertain details of this expenditure. One wants to know 

 something about this item for the last five or ten years. 



Useful information is also afforded by calculating the 

 income and expenditure per ton of coal and per thousand 

 cubic feet of gas accounted for. The first is arrived at by 

 dividing each item of the revenue (21 to 47) by the number 

 of tons of coal carbonized, in this case 700 (see 41) and 

 the second by adding to the total (21 and 22) the quantity 

 of gas used at works (if not already included) and dividing 

 as before. If the cost of coal is considerably more than, 

 say, three-fifths of the receipts for gas, bad carbonizing 

 or a high " unaccounted-for " item may be expected. 



The points to be remembered, if there is reason to suspect 

 that an attempt has been made to show a high rate of profit 

 (and there are several causes that tend in that direction), 

 are to see that the stocks are not over-valued, to scrutinize 

 closely the additions to the capital account, and to see that 

 there has been a proper outlay on repairs and maintenance. 



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