An arresting example of the folly, almost the mendacity, of
judging a business by the dividends on its nominal capital, and on that basis demanding a higher fix on profits, is provided by the balance-sheet of the well-known Brightside Foundry Co., of Sheffield, which holds its annual meeting next week. Its nominal capital is L450.,000 in 1,800,000 ordinary shares of 5s. each. On these it is paying a dividend of 5o per cent.-2s. 6d. There are also £5o,000 of prefer- ence shares. But hundreds of thousands have been ploughed back into the business, with the result that its present assets are valued at £1,586,675. How takings are actually divided, in percentages, is strikingly shown in this table:
Materials used ... 62.4 per cent.
Wages, Salaries and Insurance ... ••• 27.9 ,, Taxation • • • 4.6
Depreciation and replacement reserve • • • 2.3 Dividends (net) • • • 2.0 ,, ,, Retained in business
Yet someone is perfectly capable of getting up in the House of Commons, pointing out that this firm is paying the shocking divi- dend of 5o per cent., and demanding that the profits tax be doubled. JnNus.
Previous page
