Indiana daily times. [volume] (Indianapolis [Ind.]) 1914-1922, 1921-05-07

two months was caused Dy an ADJUST
ment of coke prices"
The commission then sets out in de-
tail what it believes to be fair income
statement of the company for the year
1920, showing a net income Of $3.50, 1871
against the company's contention that Its
net income for the year was $154,S1S.3O.
The commission excluded from the dten.
of production a total of S254, 1876, rep
resenting S245, 020.42 charged off for
shrinkage Of inventory and $0.147.74, rep
resenting obsolete material charged off.
The commission also eliminated income
tax from operating taxes, deducted $1I,-
54441 from the depreciation as set ort
by the company and eliminated So, 61490
charged up to reserve for sinking fund
which the commission held was not p
proper charge, as it did not represent
, the actual payment Of a deot.
COKE PROBLEM GONE
INTO IN MUCH DETAIL.
The coke problem is discussed in detail
in the following language:
mo provision is made in any Of the
classifcations of accounts for artificial
gas utilities permitting or authorizing
such a utility to charge as an operating
expense the hypothetical loss supposed
TO have been sustained by reason Of q
fall in the market price OF materials and
supplies on hand referred TO as shrink
age Of inventories. The whole theory of
utility accounts is built up Oh an actual
cost basis, materials and supplies being
charged to operating expenses as used
at the cost price. The Federal govern
ment for the purpose Of computing in
come tax in 1920 has permitted concerns
to make inventories on the basis of cost
or market, which ever was lower. This,
Of course, has q tendency to minimize
profits upon which income tax must be
paid. This policy seems TO have been
initiated by the government in order TO
assist in the readjustment OF business
after the war period. The commission
for the reason indicated does not allow
the item of S245,O00 shrinkage in inven-
tories as operating expense"
DOUBTS COMPANIES
CREDIT EXHAUSTED.
In taking up the contention of the
company that its credit is exhausted the
commission states that the circumstances
make this hard to believe. 1t points out
that the total of stocks and bonds Of
the company would be only 81, 900,
''475, 900 less than a conservative value of
the property" of the Citizens Gas Com
pany. The commission points out that
the company earned more than twice
its fixed charges last year. The add
tionsl valuation 10 make up the total
Of SO, O00.O 600 is derived from a valuation
OF 81. 100000 placed on the property of
the Indianapolis Gas Company with
which the citizens company operates.
In q statement of costs and profits Of
gas the commission says:
The cost Of water gas at the holder
per 1000 cubic feet was, In 1920, 66.9
cents as compared with 499 cents in
1919 and 5s.7 cents in 1918 and 52.o cents
in 1917. In 1920 the cost at the holder
was more than the revenue per 1,OOU
cubic feet from the consumers. However,
the water gas produced and delivered to
the holder in 1929 was only 1853 per
cent of the total.
OVEN GAS COST CENTS
LESS THAN NOTHING.
THE evidence shows that If the
residual cooke, ammonia and tar earn
ings are deducted from the total pro
duction OF oven gas, the average cost
per 1000 cubic feet OF oven gas at the
holder would be in 1870, cents per
l 600 cubic feet less than nothing. BY
reason of the use of about three fifths
of the total oven gas produced under
the ovens in the production Of coke, and
the relative small volume Of gas sales
to the total sales, petitioner actually
realized for it's gas S cents per thousand
cubic feet before any OF it was sold TO
the public.
There would have been cents per
| l 1000 cubic feet OF profit to the gas COM
pany on it's oven gas II it had not had a
single consumer, and II il had thrown
away all the gas that was delivered to
the people Of Indianapolis. We properly
may say that, in addition to the 61A
sales to consumers, 1t realized cents
/ direct earnings by the use in its coke
business Of a large percentage Of the gas
produced so that the total revenue per
! 1000 cubic feet was 61.74 cents plus s
cents, or a total of 6e.74 cents. Now,
II we take from this realization all the
cost Of distribution, amounting to 1919
cents per 1000 cubic feet, and all the
commercial expense of the whole bust
ness, amounting to 81 cents, and all the
general expense OF the whole business.
amounting to 359 cents, and all the
taxes on the whole property, amounting
! to 1872 cents, making a total of So 4G
cents, we have left a gross income avail
able for return on the investment of 34.2s
cents per LOCO cubic feet of gas sold.
ALL EXPENSE CHARGED
TO GAS BUSINESS.
obviously the items above mentioned
could not properly be charged against
the gas alone, but as It is impossible to
say how much of each should be charged
to the gas business and how much TO
the coke and other business, all of such
expense will be charged to the gas bust
ness for the purpose Of this calculation.
"At the worst, therefore, we have a
gross income of 342S cents per 1000 cubic
feet. If we then charged against the gas
business all the fixed charges of the en-
tire business, including all of the interest
charges and lease rentals, amounting to
1882 cents and the full dividends on all
Of the stock of the petitioners, amount
| ing to 655 cents, or a total deduction
from gross revenue of 3007 cents, there
would still be left 4.21 cents per 1000
cubic feet for surplus. which on the basis
Of the gas sold in 1920 would be $685.
47S.70."
| The proportion Of water gas to oven
| gas will have considerable effect on
operation costs, the commission shows,
| but it holds there is no reason for IA
creased production OF this type of gas
unless the company desires to cut down
/ its coke production. At the same time
water gas cost is much decreased be-
/ cause Of a decrease in the cost of oil.
The commission sets out a table of
! figures showing the collapse of the coke
/ market which the company gave as its
reason for an increase.
In order for the practitioner to pros
/ per, 1t is absolutely necessary that it
market its entire production of coke at
favorable prices" the commission states.
| Its production has been over 10000 tons
| a month 1t will be noted from the fore