10 



N. H. Agri. Experiment Station 



[Bulletin 251 



Perhaps the most surprising results obtained in the study are the 

 great differences in amount of sales compared with the actual amount 

 of fixed costs. (Table 4). No better example could be had of effici- 

 ency and lack of efficiency in the use of capital than is apparent in 

 these illustrations. A range in total amount of fixed costs from $600 

 to $1000, for instance, resulted in sales varying from $18,000 to $70,522. 



The ratio of fixed costs in relation to sales is obtained by dividing 

 the amount of fixed costs by the total sales for each store. Although 

 the majority have fixed costs per dollar of sales between one and three 

 cents, there are many who have more; four stores have over five 

 cents in this item. The extremes noted in the previous table are not 

 so apparent when reduced to the ratio basis shown in Table 5. There 

 were 14 stores with an average of $.015, 12 with $.025, 7 with $.035, 



Table 6 — Relation of Total Investment Turnover to Fixed Costs per Dollar of Sales 



4 with $.045 and 4 with $.055 fixed cost per dollar of sales. As total 

 sales increase from less than $40,000 to $120,000, fixed costs decrease 

 from $.0350 to $.0240 per dollar of sales. 



Effect of Turnover of Total Investment on Fixed Costs 



Store managers are interested in knowing how rapid a turnover of 

 total assets is made in relation to yearly sales. This is found by di- 

 viding the sales by the total investment. Turnovers varied from 1 to 

 12 times with an average for all stores of 4.04 times. 



By comparing total investment turnover with fixed costs per dollar 

 of sale, it is apparent that low costs are the result of rapid turnovers 

 and high costs the result of slow ones. Those stores wliich had small 

 turnovers were operating at a disadvantage. (Table 6). There was 

 a difference of over $.015 in fixed cost per dollar of sales as the total 

 investment turnover varied from 4.86 to 3.30 times. 



