13. If property comprises a factory, is its construction and equipment modern, in first-class operating condition, adapted to most efficient operation of the enterprise, and capable of ready enlargement?

B-As to Operation

1. What articles or materials are produced?

2. What special operating difficulties, if any, have been encountered and how overcome?

3. What stock of materials and supplies is carried?

4. What is maximum output?

5. What is minimum output for profitable operation?

6. What has been yearly output and average cost of same for

(a) Past three years?

(b) Current year?

7. What average price has been obtained for output for—
(a) Past three years?

(b) Current year?

8. What quantity of output now on hand? Usually carried?

9. How is output disposed of?

10. Is the demand steady?

II. Does the output meet the demand?

12. Could the demand and output be readily increased?

13. Could other lines be produced with profit?

14. Are operating conditions satisfactory or should they be improved?

C-As to Finance2

1. Are proper books kept showing all costs and all results of operation?

2. What debts, claims, fees, rents, royalties, or other payments not
shown by the balance sheet and the profit and loss statement,
are to be met or carried?

3. What officials and employees handle the company moneys?
4. Are the officials and employees handling the company moneys
bonded, and, generally, what safeguards are thrown around the
company's finances?

In this connection a balance sheet and a profit and loss statement should be supplied showing the company's past and present earnings, operating costs, and general financial conditions. Questions covering these points are therefore omitted. A simple form of financial statement is given later in the chapter.

VOL. 1-8

V. MANAGEMENT

A-Directors

1. How many members on the board? Give names and addresses. 2. What is their past record and present business?

3. Are all members of the board active? If not, who are the inactive members?

4. Are the directors stockholders, and if so, in the case of each individual, to what amount?

5. Have they paid for their stock in cash, property, or by services? 6. Are board meetings regularly held and attended?

7. What remuneration as directors do the directors receive?

8. Who compose the standing committees, if any, and what powers have these committees?

B-Officers

1. Who are the officers? Give names and addresses.

2. What are their past records?

3. What are their special qualifications for the successful conduct of

the present enterprise?

4. Do they work together without friction?

5. What compensation do they receive?

6. Is any increase in this compensation contemplated for the near future?

7. Are they interested in the enterprise beyond their salaries?

8. If so, how did they secure this interest, i.e., by purchase or in payment for services?

9. Are any of the officers members of the board of directors?

10. Are there any important executives not officers of the company, i.e., manager, controller, etc.? If so, give the same data for these executives as for officers of the company.

VI. OPERATING ORGANIZATION

1. What is the general plan of operating organization?

2. What are the general divisions of the business under this organization?

3. Who are the operating heads under this organization?

4. Are the company's operations under the present organization

satisfactory?

VII. PROPOSITION

1. What is the general proposition? Is it a fair one?
2. If stock or bonds are offered, is the price reasonable?
3. How do these prices compare with any former prices?
4. If common stock is offered-

(a) Is it full paid and non-assessable?

(b) What dividends, if any, have been declared on the common stock?

(c) What is present dividend rate, if any?

(d) What proportion of profits will be reserved and what surplus maintained before dividends on this stock are declared?

5. If preferred stock is offered

(a) Does it vote?

(b) What dividends have been paid on it?

(c) Are any accrued dividends unpaid? If so, what is amount

of cumulation?

(d) Has any of the preferred stock been retired? If so, under what conditions?

(e) Does any fund now exist for its redemption?

(f) Do any bonds, notes, or other obligations take precedence over the preferred stock? If so, give amounts and conditions.

6. If bonds or notes are offered

(a) What is their amount?

(b) How are they secured?

(c) Who is the trustee?

(d) Under what conditions may they be foreclosed?

(e) When and how are they to be discharged?

(f) Are they bearer or registered obligations?

(g) What interest do they bear, and when and how is this interest paid?

(h) Are there any peculiar provisions in the deed of trust affect

ing these bonds or notes?

(i) Are there any other securities taking precedence?

VIII. DISPOSITION OF MONEY SECURED

1. What is the general purpose of the offering?

2. Does the money received go into the treasury of the company?

3. If any does not go into the treasury, to whom does it go and for what purpose?

4. Of the money going into the treasury—

IX. GENERAL

(a) What part goes to pay off existing debts, obligations, and claims?

(b) What part, if any, goes for promotion expenses, commissions, etc.?

(c) What part goes into active development and operation and how is this money to be applied?

(d) Is the amount asked for sufficient to accomplish the desired results?

1. What is the previous history of the enterprise or the property or undertaking on which it is based?

2. If inventions enter prominently into the proposition

(a) What is the previous record of the inventor?

(b) What are the special results of the invention?

(c) What is its present condition, i.e., is it fully covered by patents; is it developed to the point of commercial operation, etc.?

3. Are there any company contracts or obligations not mentioned in the answers to the foregoing questions by which the enterprise is now or will hereafter be affected?

4. By whom are the answers to the foregoing question made?

The Financial Statement

A financial statement should always accompany a complete report or statement of a going concern. Such statements frequently conceal-at least from the ordinary business man not trained in accounting-more than they reveal. A simple nontechnical form of statement that will at a glance give the general financial status of the concern is very desirable. The following statement is commendable for its clearness and for the fact that it gives just what the average business man interested in the company would wish to know. This form of statement is used in reporting to its stockholders by a well-known manufacturing company.