Evening star., 1952-06-19

may well be beneficial. Nor is it
possible to recall the stock split
up, which will probably continue
to have baleful effects for some
years to come. But there are cer-
tain things that can and should
be done now. They are:
/. The Public Utilities Commits
sion should Immediately make a re-
statement of net operating in
come, rate of return. and net in
come for the years 1942-1951,
which will set before the public
the true facts on these matters.
2. The Public Utilities Commits
sion should consider the possibility
of rectifying the action it took in
1946 of permitting the Company
to write off the imitation" in it's
property account against the
So. .353,358 received by the COM
pany by way Of tax refunds be-
cause of accelerated amortization.
This amount should have been
applied as indicated above for the
benefit of the public rather than
the stockholders. Correction of
this action will increase the rate
|of return now being earned by
the company and thereby decrease
the pressure for fair increases.
The excess over original cost that
has been written off should of
course, not be restored to the
balance sheet but should be writ
ten off as against free" surplus,
created if necessary by reducing
the par value Of the common
stock.
3. The Public Utilities Commits
sion should revise it's reporting re-
|quirements in the following re-
|spects:
(a) Taxes attributable to non-
operating income should be segre-
gated from those attributable to
operating income.
CD There should be a tabular
description of all major reserves,
specifying all debts and credits to
these reserves as we'll as their con-
dition at the beginning and end of
each fiscal year.
(c) Current assets should be re-
classified to reflect the true situa-
ton. Governments and marketable
securities are truly current assets.
Cd Profits and losses from the
sale Of property should not be
handled merely as credits to
surplus.
(e) The beneficial holdings OF
officers and directors should be re-
ported, not merely their record
holdings.
f) All changes of beneficial
and/or record holdings of officers
and directors should be reported
monthly, particularly under the
circumstances peculiar to Capital
Transit Co.
(g) It may not be possible to
obtain exact correspondence be-
tween Capital Transit Co. s report
to the Public Utilities Commission
and to the Securities and Ex-
change Commission, but a brief
reconciliation of these reports
should be made to the Public
Utilities Commission.
CHI The cash flow budgets of
the Capital Transit Co. should be
submitted to the Public Utilities
Commission and made available
for public inspection.
Cd The Public Utilities Com
mission should complete it's study
on the depreciation rates of Capt.
tai Transit Goa study that has
been pending for many years.
Cd It might be we'll for the
Public Utilities Commission to
make a thorough re-examination
of the rate base of Capital Transit
Co.. inasmuch as cash from depre-
citation tends still to back up.
(k) In the light of the inevitably
declining debt ratio of Capital
Transit Co., the Public Utilities
Commission in dealing with future
rates of return might give the
public the advantage Of a reason
ably high even though hypothetic
debt ratio. It may be contended
that a corresponding reduction
in the cost of equity money, is the
equivalent of such an approach,
but practical considerations lead
to q different conclusion.