Annual Statements

Now that the shower of annual company reports covering the entire calendar year of 1923 has abated, considerable criticism has arisen concerning the real significance of the facts which they set forth, and their power in their present form to deceive instead of enlighten the investing public.

The average company in 1923 made money rapidly in the Spring and not so easily in the Fall. Some companies ran last Autumn upon their Spring profits. Yet nothing as, to the month-by-month trend of their business is shown in an ordinary annual statement. According to current opinion in some quarters, for example, the Studebaker Co. did very well in the Spring of 1923, and poorly in the following Winter. Yet its annual report, issued early this year, would give the reader an idea of great prosperity at a time when the business was not going particularly well. There are, of course, more extreme examples in the cases of less substantial concerns.

There has consequently been recently a great demand from business men for quarterly reports along the lines of those long issued by U. S. Steel, instead of simply annual statements which are out-of-date by the time they are issued. President Seymour L. Cromwell of the New York Stock Exchange, has long favored such a step. But the next move must come from the leading corporations themselves. Business men are incessantly talking about obtaining the good will of the public. Here is an effectual way in which it can be done.