COMPANY BALANCE SHEETS.

Otago Daily Times, Issue 18857, 9 May 1923, Page 6

COMPANY BALANCE SHEETS.

DONAGHY’S ROPE A.\'o TWINE COM PANY (ETC,).

Paid-up capital, £33,250. Debenture issue, £BOOO. Dir. (iucluilStanding Trading Yet iug Recharges. profit. profit, bonus), serves. Mar. 31. £ £ £ p.c. £ 1920 ... 33,011 10,898 4,309 10 19,709 1921 ... 45,997 14,992 3,778 10 19,992 1922 ... 42,148 10,011 5,084 10 21,501 1923 ... 38,252 14,782 7,554 10 25,628 The noticeable feature of this company’s accounts is the steadiness of its dividend. For the year juet closed the recommended distribution to shareholders is 10 per cent., the same rate as 12 months before, when the net profit was roughly two-lhirds of that of 1922-23, and the same as 24 months ago when the profit was practically one-half. The balance surplus of 114 per cent, on this occasion is divided between reserve and tlio employees’ benefit fund. The result is that reserves, which were steadily rising, have made a. substantial increase and now stand at 72.7 per cent, of the paid-up capital. The trading profit shows a largo advance on last year, but this is partly neutralised by the heavier income tax.

The chief factor in the larger profit is charges. , Goods account shows* a balance considerably under that of 1920-21, but the reduction of charges is even larger. As usual, these are lumped together, and it is not disclosed where the cutting down has taken place. It is noticeable, however, that no mention is now made of provision for bad debts, and the actual debts written off are entered by themselves. A. sum of £BOOO on debenture accourf?. remains as a debt due by the company, on which the rate of interest paid is per ■ cent., not excessive as rates have stood of late. These debentures were probably issued some little time ago, and are fixed for some years. There is enough cash in bank and on hand to meet them and the sundry creditors, provision for income tax included. In addition, there is held in New Zealand Government investments the sum of £5400, the return on which' is likely to be under 5J per cent. The account called reserve is increased by £ISOO at this time—the first addition for some years. Plant and building renewal account has been left as before, depreciation in this connection having received due attention. A new heading appears in the balance sheet, that of Employees’ Benefit Fund. A capital sum of £2500 was originally laid aside for this purpose, and! a like amount in war bonds earmarked accordingly. A' further £2500 has now been added to this fund.

Land, buildings, and plant are entered at £21,284, rxo additions evidently having been made during the year. Th© reduction in th© figure for thii property that has been taking place recently still continues. During tho latest four annual periods £8454 in all has been written off. If tho quantity of stock is anything similar to that at previous balances, the valuation must have been drastically dealt with. Book debts and deposits have risen in a marked degree, and this may have some connection with the diminution of stock. Tho item of' deposits is a newcomer, and while not entered separately, must’ be responsible for a fair revenue, looking to tho company’s increased income from interest. ■

With the fixed assets reduced to £24,234, the liquid assets at £36,652 represent tho bulk of th© company's property. Their porportien to the whole has not varied much, but that tho trend has been upward is shown below—viz.:

Assets. .Ratio. Year ended. Liquid. Total. p.c. Mar. 31, 1920 £45,057 £73,091 61.64 Mar. 31, , 921 52,977 79,111 66.97 Mar. 31 J '22 47,161 74,045 63.63 Mar. 31, Iffi:.! 56,652 80,936 70:00

When the liquid assets, as in this instance, are sufficient to meet all liabilities, plus the paid-up capita], and still leave a balance approximating £SOOO, the possessor may be said to occupy a strong position financially.