9

H.—44

The next table indicates the position of the various companies in the matter of overhead expenses in their relation to sales. It will be noticed that expenses have been treated both inclusive and exclusive of income-tax, and it may be explained that for the purpose of judging the overhead efficiency Of a company it is necessary to eliminate income-tax—-a charge which is relative to the profit made, and which has no very direct relation to the management of the enterprise,. For that reason, particular consideration should be given to the percentages shown in the right-hand column :—

It will be seen by reference to the first table on page 8 that the net profits of Company E in that table in relation to the capital of the company were in each year considerably in excess of the, rate of net profit taken by the other companies. Companies F, G, H, and I were also somewhat above the average during the years 1.918 and 1919. These latter companies, however, were among the least successful in pre-war years, and, being small firms, hardly merit particular consideration here. Company E, however, may be said to have a case to answer. This firm is shown as Company H in the two tables immediately preceding, and appears as Company F in the third table on page 7. A summary of the figures for this firm are given below : — 1914. 1918. 1919. £ £ £ Gross capital .. ... ... ... ... 50,725 82,918 90,616 Sales ... ... ... ... ... ... 47,933 122,091 132,314 Gross profit ... ... ... ... ... 11,538 38,746 46,325 Overhead expenses, exclusive of income tax ... ... 5,972 11,662 13,922 Net profit from trading (relative to sales) ... ... 5,174 18,912 22,994 Net profit for purpose of comparison with gross capital ... 6,242 21,476 27,436 Percentage of sales to gross capital ... ... ... 94-50 147-24 146-00 Average all companies ... ... ... 102-20 157-09 135-54 Percentage of gross profit to sales ... ... ... 241 31 "7 350 Average all companies • ■■ •■• ... 214 245 231 Percentage of overhead expenses to sales.,. ... ... 125 95 105 Average all companies ... ... ... 13*5 120 11 - I Percentage of net profit on sales ... ... ... 10-80 15*49 1737 Average all companies ... ... ... 5 - 5 B'7 79 Percentage of net profit on gross capital ... ... ... 123 259 303 Average all companies ... ... ... 6'o 144 11;9 An examination of the above figures will show that while the overhead expenses of this firm are, in relation to sales, slightly below the average, the percentage of sales to gross capital does not vary greatly from the average results of all the companies combined. The rate of gross profit on sales, however, is materially above the average, and this has undoubtedly been the main cause of the high rates of net profit on sales and of net profit on capital.

2—H. 44.

(I) (2) (3) Company. Year. 8 ales, Overhead Charge, inclusive of Income-tax. Percentage of (2) to(l). Overhead Charge, exclusive of Income-tax. Percentage of (3) to (1). A B C D E £ 1914 .. 9,934 1918 .. 17,420 1919 .. 28,212 1914 .. 26,265 1918 .. 51,610 1919 .. 02,291 1914 .. 38,005 1918 .. 86,298 1919 .. ; 80,987 1914 .. ! 239,725 1918 .. | 449,578 1919 .. ! 449,509 1914 .. I 943,863 1918 .. i 1,748,010 1919 .. ! 1,720,613 1914 .. ! 144,413 1918 .. J 289,912 1919 .. I 298,386 19.14 .. 76,080 1918 .. 159,285 1919 .. i 152,064 1914 .. i 47,933 1918 .. ' 122,091 1919 .. ' 132,314 1914 .. | 43,272 1918 .. ! 103,074 1919 .. 111,423 £ 2,543 3,060 4,440 2,844 7,292 8,178 4,935 1.2.833 14,830 49,470 76,697 64,784 113,539 261,478 277,376 18,857 36,954 35,350 15,278 40,081 37,940 6,364 19,533 22,332 6,023 14,665 16,172 25-6 17-6 15-8 10-8 14-1 13-1 12-9 14-9 18-3 20-6 17-1 14-4 12-0 14-9 16-1 13-1 12-7 11-8 20-1 •25-1 24-9 13-3 16-0 16-8 13-9 14-2 14-5 £ 2,543 2,617 4,343 2,814 4,046 4,296 4,864 7,435 9,618 47,352 58,409 47,100 110,052 215,125 192,664 18,522 24,698 22,419 14,711 31,479 30,480 5,972 11,662 13,922 5,890 10,115 11,728 25-6 15-0 15-4 10-7 7-8 6-9 12-8 8-6 11-8 19-7 13-0 10-5 11-7 12-3 1-1-2 12-8 8-5 7-5 19-3 19-7 20-0 12-5 9-5 10-5 13-6 9-8 10-5 F G H j. .. Total .. j; • ' 1914 .. ! 1,569,490 1918 .. i 3,027,278 1919 .. j 3,028,747 219,853 472,593 481,402 14-0 15-6 15-9 212,720 365,586 336,570 13-5 12-0 11-1 ■>■> • •