Stock on hand or merchandise calls for most careful consideration and analysis. Old and unsalable stock accumulates rapidly, especially under poor management, and even if the stock is reasonably new, its amount, if out of proportion to the total sales, may be a burden to the business and prove a source of weakness. It is important to know if the figures are the result of actual inventory at cost price, and also on what basis old or unsalable goods have been included. In revaluing the merchandise for credit purposes due consideration must be given to the nature of the business. A deduction of 10 per cent is generally sufficient for staples such as groceries, provisions, iron and leather, while on goods partaking of the nature of luxuries, or depending for their sale on changing fashions or seasons, there should be a much heavier discount. It is always advisable to look over the stock as occasion offers. Another good plan is to keep a record of the result of local liquidation sales of goods and receivables; no better object lesson can be found as to the realizable values of different kinds of merchandise.

In a manufacturing business it is necessary to know the several values of raw materials, finished goods and goods in process of manufacture. Raw material if not too much broken in bulk is worth within 10 or 15 per cent of the cost. Finished goods, if ready for shipment, should be worth actual manufacturing cost, but unfinished goods should only be considered to the extent of the goods actually in process of manufacture, as established by the ratio between the daily and total annual output. Any balance over this amount should be inquired into, as under this heading are often inventoried parts of articles whose manufacture has been discontinued.

The amount of merchandise in a business should form a reasonable proportion of the annual turnover. Conditions Vary in different trades and localities, and it is impossible to establish any standard. Roughly speaking, however, the turnover of a business should be two and one-half to three times the working capital.

Ample insurance is necessary in any business. Whether a bank is interested or not, every customer should be advised of the wisdom of keeping fully insured. If the insurance is assigned to the bank the schedule should be compared with the annual statement, and all the conditions of the policy carefully examined.