Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-04-06
LIQUID CONDITION
OF FIRMS BETTER
Accountants Show That Most
Corporations Have Weather
ed Depression Very Well.
special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK. April 6.-Strengthen-
ing and improvement of the general
fiscal position Of corporations in the
1929-30 period as compared with the
1920-21 period of depression. are shown
in compilations announced by Ernst q
Ernst, accountants, from published re-
ports of 433 corporations whose figures
are available for 1929 and 1880 and
also for 1920 and 1921. The figures are
classified by 20 different industrial
lines For the aggregate of all the
corporations in all the lines the main
1ints are as follows:
Cash and securities showed an in
crease of 054 per cent in 1880, COM
pared with 1929 and a corresponding
increase of 3.l5 per cent in 1921, COM
pared with 1920.
Inventories lin dollar value) showed
decline of 1859 per cent at the close
of 1880, compared with 1929, and
corresponding decline OF 26.48 per cent
at the close of 1921, compared with
1920.
Net working capital showed a decline
of 5.68 per cent at the close of 1880,
compared with 1929, and a decline of
968 per cent at the close of 1921, COM
pared with 1920. Net working capital
at the end of 1880 was S6,949 100000
much greater than the $4,706,000,000 at
the end of 1921.
Percentage of net working capital
represented by inventories at the close
of 1920 was 81 per cent, at the close Of
1921, 66 per cent; at the close of 1929,
SO per cent, and at the close Of 1880,
SIS per cent.
Ratio of Liabilities.
Ratio of current assets Qess inven-
tories to current liabilities at the end
of 1920 was 1.39 to l, at the close of
1921, 9B to /; at the close Of 1929,
276, and at the close of 1880, 3.34 to /.
Net profits (400 companies) declined
4316 per cent in 1880, compared with
1929, and 1898 per cent in 1921, COM
pared with 1920.
A number of trends are clearly in
Gicated by the study, leading to the
conclusion that corporations generally
have progressively improved their finan-
cial position from the standpoint of
liquid assets and the relative amount
of working capital required for inven-
tories. Aggregate figures of the ABB COM
paneS show:
Current aSsets-In 1921 $3.50 .05o, 800;
in 1880. $S,279. 523,2O5; increase, ST.
929472855.
Current liabilities-In 1921, ST ,643,-
l9S4620; in 1890, $l,329 1928, 566; de-
crease $314,156,052.
Inventories-In 1921, $1,000 ,443. 30l;
in 1880, s3,833,4l2,75l; increase, $74O,-
96945O.
Cash and sscurities-In 1921, 81 ,434,-
S54,867; in 1880, 81, 548, 86O, $40; increase,
s., ia, 405,77
Liquid Position.
The improvement shown in the
liouidity of balance sheets also clearly
reflects the additional capital brought
into the financial structure of corpora
lions in recent years through several
years of high profits and through finan-
cings which were the means of liquidat-
ing current liabilities and providing
substantial amounts of working capital
Inventory declines in dollar value in
1880, as compared with 1929 were rel
atively less than for 1921, as compared
with 1920. Adjusting these inventories
for price declines it is indicated that
while at the close of 1880 inventory
quantities in many lines snow decreases
as compared with 1929, the group as a
whole shows slight increase. Certain
raw material lines seem 10 account very
largely for this increase. Adjusting 1921
inventories in similar manner, it APP
pears that even though the price de-
clines from 1920 were larger than as
between 1880 and 1929. inventory guam
titles we're slightly lower at the close of
1921 than at the end Of 1920.