Jinancial Reviews DEALING WITH FARMERS

NZ Truth, Issue 1148, 1 December 1927, Page 4

Jinancial Reviews DEALING WITH FARMERS

Accounts

Abraham and Williams, Limited, Stock and Station Agents

POINTS FROM THE BALANCE-SHEET

(By "Fiat Lux.")

The aocounts of Abraham and Williams Limited which has been m the stock and station business m the southern portion of the North Island as an incorporated company for the last 26 years fail to impress this critic f avorab ly so far as disclosed earnings go.

UVEN so, it has to be admitted that J-i tho balance-sheet shows the firm to be m a very sound financial position, but the disclosed net earnings for the year ended September 30 >last, are equal to only £4.7 per cent, of the shareholders' funds which included paid-up capital, reserve and the balance of undistributed profit brought forward from the previous year. The earnings were only sufficient to provide the preferred shareholders with their 6 per cent, and the ordinaries received 5 per cent. The past season has no doubt been a poor one for the primary producer and this must have affected the earnings of stock and station firms to some extent.

Even so the net shrinkage m this firm's assets and .

liabilities amount-

dng to over £33,000

takes some ex-

.plaining,

particu-

larly

at a

time

(When the farm- " ing community is so badly wanting financial assistance. The policy of the firm m curtailing its book debts by £35,500 and placing £20,000 of the resultant cash on short call deposit does not appeal to this critic as exhibiting such enterprise m the managerial policy a shareholder would wish. Putting the matter m another way, the firm is not making progress. It has ample financial resources to do a much bigger business than at present, but the managerial policy seems extremely conservative. In an old established business like this an expansion of business each year could reasonably be expected instead of which the contraction of floating assets can be interpreted only as a contraction of general business activity which is to be deplored. The company's disclosed earnings for

Taking the bank overdraft and creditors together and comparing the 1923 and 1927 totals lt is interesting to find that m the four years a net reduction of £9111 has been effected whilst m addition cash to the tune of £20,000 has been accumulated and placed on short call. It is extremely difficult to understand this move which spells reduction m business. Most firms In these difficult times can keep every cent of resources working overtime and why this firm should draw In its financial horns at a time when primary products are distinctly i on the up-grade, passeth the understanding of this critic.

Coining to the assets, property account duringr the year has grone down by £17,081, but the directors' published report to shareholder! is a ivery meagre; affair and doesn't even mention the matter.

One vrould have thought that the disposal of almost one-ftfth of the company's landed estate was -worthy of a few words of explanation m the annual report, but evidently the directors think otherwise. Book debts, In common with other assets also show a heavy reduction In total. After making due provision for bad and doubtful debts, the amount outstanding at the end of the year under review was £318,669 being no less than £36,279 below the 1926 figures. Compared with 1928 the total is nearly £9000 down after including bills receivable which must m each year be added to the book debts to get a correct perspective of the total credit granted by the firm. Stocks on hand at £20,839 Bhow the