Askov American. [volume] (Askov, Pine County, Minn.) 1914-current, 1934-04-26
OIL BODIES
BEST CO.OPS
University Division of Ag-
riculture Submits Repre-
sentative Comparison.
Each Capital Stock Dollar is
Now Shown to be
Worth $3.50.

The first cooperative oil aSSocia-
ton established in Minnesota to re-
tail gasoline, kerosene, and lubricat-
ing oils, as the principal commodities.
was organized at Cottonwood in 1921.
The following year, the Central Co
operative Association at Owatonna
was formed. Eight associations were
organized in 1924. six in 1925, twenty
six in 1926 and eight in 1927. At the
present time, there are approximately
$50 cooperative oil associations in
the state.
An analysis of the financial and
operating statements of many of these
associations shows clearly that Co
operative oil associations are among
the most successful types of co-opera-
tive endeavor in Minnesota.
Financial Condition.
The average of the total assets
(value of the property and property
rights of 16 representative associa-
tions on December 81, 1888, was $780,
400. Current assets (cash, accounts
and notes receivable, accrued interest
receivable, and inventories of pc
troleum products) constituted 5S.S per
cent of the total assets. Investments
(stocks held in other organizations
and certificates of indebtedness rep
resented 80 per cent of the total
assets. Fixed assets Gland and the
deprecated value of buildings and
equipment) comprised 1915 per cent
of the total assets. Other assets
(prepaid insurance, inventories OF
supplies, and similar items not other
wise classifiedD were 3.S per cent of
the total assets.
The average of the total current
liabilities (accounts and notes pay
able, accrued taxes, salaries and in
terest) was S2,304, or the equivalent
of IL per cent of the total assets.
These associations had no fixed liza
bilitieS such as mortgages.
The net worth of an organization.
that is the outstanding capital stock
and surplus, represents the claims of
stockholders against the assets of the
business. The average net worth of
these associations on December 81,
1888, was $30,156. or 92.9 per cent
of the total assets. Capital stock
represented 3S.5 per cent and surplus
61.5 per cent of the total net worth.
In other words, on the average, each
dollar invested in capital stock in
these sixteen associations was worth
$3.50.
ciO LOT in, ic
that between current assets and cur
rent liabilities. This ratio was S.29
which means that these companies
had available $500 in cash and other
assets readily convertible into cash.
to pay each dollar owed to creditors.
Business Operations.
The total sales of petroleum pro-
ducts of these sixteen associations
amounted to s990,317. The average
for each association was SCI 1895. The
total cost of the petroleum products
sold was 1872 per cent of the total
sales. The average gross margin was
268 per cent of the total sales. This
may seem relatively high but the CO.
operative oil companies follow the pol
icy of selling their products at the
regular retail prices and distributing
part of the earnings in the form of
patronage dividends. Operating eX-
penses averaged II per cent Of total
sales. The gross operating margin
less operating expenses left an aver
age net operating income of 9.S per
cent of total sales.
Many of these associations have in
come other than that from the sales of
the principal commodities. Such in
come is made up of interest earned,
purchase discounts taken, and income
from sidelines. Other j n co e
amounted to IL per cent of the total
sales. Similarly, these associations
have deductions from income which
are not ordinarily classified as oper-
ating expense. They include such
items as interest expense, sales dis
counts and other incorporating costs.
These other deductions amounted to
A per cent of the total sales.
The average net earnings of these
associations was $6,515, or 1O.5 per
cent of the total sales. These earn
ings are used to increase the surplus
and to pay dividends on capital stock
and patronage dividends.
Need Good Patronage.
One difficulty encountered by some
farmers purchasing associations, is
that they are unable to obtain a suf-
ficient volume of business to permit
of economical operations. That farm
ers' cooperative oil associations are
meeting with more general success
than some other buying enterprises
probably is due in a large measure