THE NET RETURN IS MODERATE

NZ Truth, Issue 1043, 21 November 1925, Page 17

THE NET RETURN IS MODERATE

The disclosed net profit for the year, j after making provision for income tax, amounts to £51,040, to which has to be added £22,382 brought forward from last year, making an available total of £73,322. This sum has been disposed of by paying the preference shareholders (whose paid-up capital is £250,000) their annual and presumably guaranteed cumulative dividend of 6 per cent, per annum, absorbing £15,000. . Ordinary shareholders, with paid-up capital aggregating £177,833, receive an 8 per' cent, dividend, plus a 2 per cent, bonus, which takes a further toll of £17,781 of the profits. The reserve fund, which then stands

at £45.000, gets £14,885: and the balance, £25,655, is carried forward to the next accounting: period! To listen to? the average 1 layman discussing the wonderful financial results which are said to accrue from "running a rag shop," one would expect a huge concern such as; this to . show some proof of the accuracy of popular opinion. , . Quite the contrary is the case, however. ' The actual disclosed net return . on invested capital for the year is £11 9s per cent. And if reserve fund and profit and loss balance are included m the calculation of capital employed, as they should be,' then the result is only £10 6s per cent.