Comments on the 1914 Annual Report
- Will Cheshire -
The comments that follow are based entirely on a review of the financial data presented in the report of June 30, 1914. Without a knowledge of prior or subsequent annual reports and without the information to compare this company to other companies of the same size, in the same local and performing the same type of enterprise, it is not possible to make a statement as to the relative health of this company.
The comments that follow refer to the page in the report that is being analyzed. There is no attempt to compare information in one part of the document to that in another part of the document.
Page 3: Directors and Officers:
Of the seven directors four are of the Gould family, including Jay Gould. None of the directors resides in Colorado. Neither the Chairman nor the President of the company resides in Colorado. The General Manager takes Denver, Colorado as his residence. Of all of the officers, only the General Superintendent is present on the railroad.
Page 5: Revenue and Income - 1914 compared to 1913:
Total operating revenues decreased by $18,157.48 over the previous year. Total operating expenses decreased by $10,360.87 for a net decrease in net operating income of $7,796.61.
The operating ratio (expenses divided by revenue) remained about the same; 65.77% compared to 65.53 %. In terms of a generally accepted principal of economics, a company should continue to operate, in the short run, if its variable costs of operation are covered. The operating ratio indicates that this is the case.
Page 6: General Comments:
Improvements in the year were small, indicating that funds were not available or that there was little desire on the part of management for improvements. There is indication that severe winter weather caused a decrease in traffic movements, resulting in decreased revenue, but increased maintenance cost.
Page 10: Income Account:
This is report includes the information from page 5, but with the
addition of non-operating income and the cost of rental of equipment, joint
facility cost and interest cost. The result is a net loss of $13,861.71
in 1914, compared with a profit of $4,450.21 in 1913.
Page 10 & 11: Balance Sheet:
Most significant here is the comparison of property investment in "road and equipment". An increase of only $1,558.96 from 1913 to 1914 indicate that operating funds were not available for capital improvement and that debt was not increased for such investment.
Page 16: Operating Expenses:
Maintenance of way and Structures:
Most significant was a decrease spent on ties, roadway, track, grade crossings,
and telegraph lines. The most significant increases in expenditures were
for removal of snow , building and grounds maintenance, and joint track
and yards maintenance.
Maintenance of Equipment:
There was a significant increase in the cost of repairs to locomotives
and a decrease in cost of the repairs to freight cars.
Traffic Expense:
There was a significant decrease in the amount of money spent on advertising.
This may have directly impacted revenue in that period.
Page 17: Continued:
Transportation Expenses:
Most significant was a decrease in wages paid to enginemen and road trainmen.
There was an increase in lost and damaged freight. The reduced revenue
would have required fewer crews and also there was less revenue to pay
them. Correspondingly, the increase in damaged freight could have been
the result of overworked crews or inadequate staff.
Page 18: Monthly Revenue and Expenses:
Revenue was lowest through the months of February through May. This could be the results of bad snow conditions as well as a normally slow period of seasonal activity in the San Juan Mountains. Corresponding expenses were lower in those same months, with a jump in the month of March due to snow removal. The busiest months were October and November. This period included the annual stock rush.
Page 19: Ratios:
There were no significant changes in the ratios from 1913 to 1914.
Page 20: Transportation Statistics:
Most significant was a decrease in freight train miles and loaded
freight car miles of 7.75% and 5.2%, respectively. Also, there was a 6%
increase in the average empty cars per train mile.
Page 21: Traffic Statistics
Passenger traffic increased in the range of 2% in 1914 over 1913. Average tonnage decreased by 4% in 1914. Total freight revenue decreased by 3.41% in 1914.
Page 22: Revenue Freight Traffic Statistics
Agricultural tonnage increased 19.65% in 1914 over 1913.
Products of animals increased by 13.16% in 1914 over 1913.
Products of mines increased 2.81% in 1914 over 1913.
Lumber tonnage decreased by 22.56 in 1914 compared to 1913.
Manufactured goods tonnage increased 3.54% in 1914 compared to 1913.
Significant in this last category were:
Canned goods increased by 93%
Sugar and related goods increased by 50.3%
Wagons, carriages, tools increased by 113%
Household goods decreased by 42%
Powder increased by 27%.
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