Dividends exceed net earnings in portions of the years 1911 and 1912, but the total earnings of those years were nevertheless great enough to justify maintaining the dividend rate

Though this illustration contains some interesting information, the chart is misleading because the scale does not extend to zero. At first glance, the dividend of 1909 would seem to be more than four times the dividend of 1908 when in reality it is only about twice as large

attempt an answer to these questions that naturally arise in the stockholder's mind:

1. Has the earning power of the company been maintained?

2. Is the property being kept in proper physical condition?

3. Is the financial condition sound?

For the purpose of illustrating the advantages of the graphic method for annual reports, the United States Steel Corporation has been selected. The chart shown in Fig. 224 is designed to answer the first question: "Has the earning power of the company been maintained?" In order to bring out more clearly the very important relation between the surplus for dividends and the dividends paid, curves Nos. 3 and 4 are redrawn on a considerably enlarged scale as seen in Fig. 225. Curves No. 3 and No. 5 are therefore identical, as are also curves No. 4 and No. 6.

Fig. 224 and Fig. 225 show that the Steel Corporation, like a large number of railways and industrial companies, reached the zenith

GRAPHIC METHODS

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