Milford chronicle., 1932-12-02
TO BUSINESS
"FACE THE FACTS"
(The Literary Digestl

BUSINESS managers are merely
riding for a later fall' if they do not
face the facts-even though the
worst of the depression may be pas
sed.
Too many corporations, says the
writer of the current Ernst & Ernst
Bulletin, are finding it "inconveni-
ent and disconcerting to recognize
sharply that the values which for
merly existed do not exist" But this
is the one thing that must be done
in order that a business can make
the most of what it has for the fu-
ture.
Nothing can be lost by definite
writing down Of values, says the
writer for this accounting firm.
After all, "a dollar earned in 1888
is more important than dollar lost
in 1882" This is the point: "It is to
1888 and subsequent. years that bus
mess should now look, and every
thing which harnesses the future
prospect of profitable operations
should be cut off and left in the
wake"
There are today mot merely one
nor one hundred, nor one thousand,
but literally tens of thousands of
corporations" in a position to oper-
ate with fair assurance of profit if
their managers are willing to do
business on actually existing levels,
and forget about the old days that
have gone for good. AS we read on:
A company suffers, perhaps, from
what it calls "over capacity" 1t has
too much plant, too large facilities,
too high values, to be carried by
currently available business.
Some of the current excess may
be justified; the low volume of bus
mess and the unprofitableness of
business will not always continue
what it is today. Too many manage
ments, however, still have their
minds on the volumes of 1927-28-29.
Or, even if they accept the probable
fact that z return to those levels is
not within sighting distance, they
postpone the ordeal of acquainting
owners with the facts.
Thus The overcapacity becomes a
dead load which saps the vitality of
that portion of the business which
is alive. The dead portion should be
cut off and thrown away, if neces-
sary.
The part of the. plant which is
idle beyond all reasonable hope of |
future activity is the most expen-
sixe part of the whole organism.
With it, there can be no profits for !
the whole. Without it, there may be
profits on the remaining live por-
tion, if properly valued.
There may be savings in such spe-
cific items as taxes, insurance, and
charges. These savings
may represent the margin between
profit and loss.
For one thing, write-down of as
sets "compels the owners to recog-
nize in one dose the losses which
they would be forced to
accept in numerous small doses."
For another, "managements need
he encouragement which will flow
rom balance sheets representing
... .....
And when it comes to credit, the
banker is likely to appreciate a
balance sheet which has been COR
'ectly ledated. AS the writer con-
inues:
To hope that the development of
avorable conditions will make un-
the reorganization of
financial structure is to perpetuate
he mistakes of the past.
fo duo n
cries of mistaken judgments. When
,ast mistakes have reached the
Ioint where it appears that there is
lothing to do about them except to
worry about them, then it is time to
wash out, abolish the worry, and de-
ote the effort to future building.
The proper time for this has pass
d long ago.
The reason why the point needs
e-emphasis at this time, however,
) that the slight upturn in business
as the effect of reviving worn-out !
opes in the minds of some manage
tents. ,
Voluntary congratulations, initi- ,
ted by arrangements themselves,
painful steps, but they are :
ass painful than compulsory credi- ,
1rs' committees or receiverships.
1t is not too early to see that
lany reorganizations will be inev- I
able in 1888. If they are tackled i
ith intelligence, they will be good.
he individual unit will be improv- q
!, and the whole fabric of business $
ill be strengthened.
Already there are plenty of signs
lat business volume and profits s
will come back to satis-
Lctory levels. The speed of this re- r
,very depends quite largely on how t.
leh unit in the whole scheme of 1
lings manages its own affairs. AL u
lady in 1882 there has been great b
'ogress in corporation reorganiza- n
on.
WINDOW" BAG HELPS Il Il
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