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 of its earning power in the year 1907. In that year more than 15 per cent was earned on the common stock, while only 2 per cent was paid. Curve No. 1 shows that the gross earnings in 1907 were $757,000,000. Then follows, in 1908, the terrific slump in business due to the financial panic, with a gradual but uncertain recovery. By 1912, the corporation succeeded in bringing its gross business up to $745,000,000, still somewhat under the 1907 high-water mark.

Fig. 224. The Earning Power of the United States Steel Corporation

Curve 1. Gross earnings

Curve 2. Operating expenses

Curve 3. Surplus earned available for dividends

Curve 4. Preferred and common dividends paid

This chart and the following charts relating to the United States Steel Corporation are submitted as a suggestion to show how the annual report of a corporation could easily give comparisons over several years. The space required for the charts is insignificant, yet the stockholders would receive the vital facts in such form as to permit a full understanding of the condition of their company as compared with previous years

The movement of operating expenses is depicted by curve No. 2. A glance at the chart shows that, during 1905-6-7, gross earnings tended to increase faster than operating expenses, which is again true in 1909 and 1910. In 1908 and 1911, it proved impossible to reduce operating expenses to conform to the reduction in gross earnings, with the result that profits were sharply reduced in both these years. In 1912, a unique situation occurs. Curves 1 and 2 run practically parallel, showing that although the gross earnings were largely increased, operating expenses kept pace. The largest factor in operating expenses is naturally labor, and the reports of the corporation