Simplicity for Employes

Dec. 31, 1937

"Accounts receivable, less reserves for doubtful accounts, discounts, etc. of

$457,738.69 at Dec. 31, 1937 and

$632,729.27 at Dec. 31, 1936

$4,795,935.30

"Inventories at lower of cost or market,

less $1,178,800.37 at Dec. 31, 1937

and $604,015.25 at Dec. 31, 1936 billed on uncompleted contracts

$9,218,793.17

"Land, buildings, equipment and mineral properties, at cost (except for the inclusion of net revaluation increases by subsidiaries or their predecessors, prior to the organization of the present parent company, of $4,316,994.85 in mineral properties and $241,764.73 in other fixed assets) less reserves for depreciation, depletion and obsolescence of

$25,127,241.35 at Dec. 31, 1937 and

$23,514,232.32 at Dec. 31, 1936

$24,780,126.21. . . ."

One of the lesser mysteries of the world of finance is why, just because an individual has managed to acquire shares in a corporation, he should be expected to understand the argot of accountancy. Yet last fortnight, undoubtedly to the great perplexity of its 7,138 stockholders, Johns-Manville Corp. phrased part of its 1937 balance sheet in the above bewildering fashion.

But last week Johns-Manville's President Lewis H. Brown, having mystified many a stockholder, startlingly reversed his field when he issued an 18-page illustrated annual report to his workers. "Here is what happened," said Mr. Brown, "to the $39,861,579 which we added to the value of the raw materials and products bought for resale after they reached our plants: We paid in salaries and wages to Johns-Manville jobholders $20,354,000. Our taxes, Federal, State and local, were $2,077,000. For research and development of new and improved products and processes, $603,000. To cover reduction in the value of our equipment . . . (this is called depreciation and depletion)--$2,179,000. Other expenses including repairs and maintenance of equipment, advertising and sales promotion, telephone and light bills, rent, etc.: $9,196,736. 'Wages' paid stockholders for use of their money (these are called Dividends): $4,562,500. Put aside for new plants . . . and for emergencies (this is called addition to surplus) : $889,343."

But Mr. Brown's triumph of exposition was this notable simplification of a balance sheet. "Very simply," he said, "it is a statement of what we own, what we owe and what we are worth. ... It is exactly the same as if you took two sheets of paper and on one listed the cash you have, the value of your home, car and furniture, and the dollar 'Bill Jones' owes you. On the other sheet you list what you owe the grocer . . . what you owe on your car. Then subtract what you owe from what you own. The result is what you are worth. . . . This figure is placed on your second sheet. Thus the first sheet--'what you own'--and the second sheet--'what you owe and what you are worth'--balance exactly."

As procedure in employe relations the report was pretty smart, too. John L. Lewis' United Mine Workers are currently organizing Johns-Manville plants, and Mr. Brown may hope his workers may be soothed by a pie-chart of Johns-Manville income, showing that they get the biggest piece.

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