'Inventory costs are a problem’

Press, Volume CXI, Issue 32715, 18 September 1971, Page 22

'Inventory costs are a problem’

(New Zealand Press Association) WELLINGTON, September 17. Increased turnover, coupled with continuing inflation, increased the dollar value of inventories substantially, the chairman of Cory-Wright and Salmon, Ltd (Mr B. K. Knowles), noted in his review for the year to March 31.

A substantial retention of earnings was inadequate to finance the increased requirements for inventories and this created the need for increased borrowing. Mr Knowles added that a higher profit could not be justified even though the increase in the dividend tax together with inflation reduced the real return to shareholders. As already announced the net profit was $9621 higher at $157,303. Trading conditions, al-

though aided by the apparent buoyancy of the economy, were difficult because of the stringent credit restriction. An unchanged ordinary dividend of 9 per cent has been proposed. This will be covered 1.9 times by the profit. The 100 c ordinary shares had a net asset backing of 239 c at balance date. The profit result was struck after providing $25,865 more at $176,369 for tax, and $9340 at $72,271 for depreciation. The ordinary dividend payment took a steady $77,688 and the preference dividend payment was steady at $lO,OOO. Working capital was $282,704 higher at $1,861,544 and the ratio improved from 1.6 to 1.7 to 1.