Typical Balance Sheets
Description
This section is from the book "Banking, Credits And Finance", by Thomas Herbert Russell. Also available from Amazon: Banking, credit and finance (Standard business).
Typical Balance Sheets
Typical balance sheet for manufacturers. Number of concerns averaged................. 62
Per cent | ||
Quick assets ............................... | .$1,000,000 | 44 |
Fixed assets ................................ | . 1,270,000 | 56 |
Total assets.......... | .$2,270,000 | 100 |
Liabilities ................................... | . 610,000 | 27 |
Net worth .............. | .$1,660,000 | 73 |
Liabilities 61 per cent of quick assets. | ||
Gross sales per $1 quick assets for 44 concerns. | . . $3.30 | |
Gross sales per $1 total assets . . for 44 concerns. | 1.60 | |
Typical balance sheet for commission men. Number of concerns averaged....................7
Per cent | ||
Quick assets ............................ | .$1,000,000 | 95 |
Fixed assets ............... | 50,000 | 5 |
Total assets ... | .$1,050,000 | 100 |
Liabilities ................................ | . 520,000 | 50 |
Net worth ...... | ____$ 530,000 | 50 |
Liabilities 52 per cent of quick assets. | ||
Gross sales per $1 quick assets | . . .$3.60 | |
Gross sales per $1 total assets | . . 3.45 | |
Typical balance sheet for jobbers. Number of concerns averaged...................28
Per cent | ||
Quick assets .......................... | ..$1,000,000 | 90 |
Fixed assets ........................... | .. 110,000 | 10 |
Total assets.. | ..$1,110,000 | 100 |
Liabilities ................................ | .. 440,000 | 40 |
Net worth ..... | .$ 670,000 | 60 |
Liabilities 44 per cent of quick assets. | ||
Gross sales per $1 quick assets on 25 concerns. | $2.25 | |
Gross sales per $1 total assets on 25 concerns. | 2.08 | |
Typical balance sheet for retailers. Number of concerns averaged....................6
Per cent | ||
Quick assets .......................... | .$1,000,000 | 75 |
Fixed assets .......................... | . 330,000 | 25 |
Total assets ................. | .$1,330,000 | 100 |
Liabilities ................................ | . 480,000 | 86 |
Net worth .............. | .$ 850,000 | 64 |
Liabilities 48 per cent of quick assets. | ||
Gross sales per $1 quick assets . on 5 concerns. | $2.33 | |
Gross sales per $1 total assets . on 5 concerns. | . . . 1.82 | |
The exactness of these relations is not important for our study of the principles involved in credit research. Suffice it to say that a study of the several balance sheets will, I believe, disclose interesting comparisons. It is instructive to note in these balance sheets the relative proportion of quick to total assets:
Per cent | |
Manufacturers have quick assets of total assets .... | 44 |
Commission men have quick assets of total assets. | 95 |
Jobbers have quick assets of total assets...................... | 90 |
Retailers have quick assets of total assets.................... | 75 |
What stronger argument could we have for accuracy in our credit methods than that manufacturers, who borrow one-half the money loaned on commercial paper, have 56 per cent of their assets in such form that we reject them as unknown and unknowable on account of our imperfect information and inability to determine their value?
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