Abstract The objective results obtained from this comparative study reveal that from 1936 to 1954 (a) the percentage of net fixed assets to total assets has decreased in relative importance; (b) the annual depreciation and depletion charge in relation to gross fixed assets has increased; and (c) the annual depreciation and depletion charge as a percentage of net sales has decreased. These phenomena perhaps have no general explanation because of the many variable factors which enter into the growth and changing relationship of the asset accounts. One outstanding reason which seems to account for the changes in fixed asset relationships is the increase in prices (decrease in the purchasing power of the dollar) during the time of the study. This is certainly not the sole explanation. A relative increase in the amount of working capital and investments to total assets occurs as the percentage of net fixed assets to total assets decreases. Present credit restrictions and bank lending practices are different from those in 1936, and probably account for larger amounts of assets being tied up in receivables. The diversification of operations will have an inclination to increase inventories and receivables. Fund accounts, consisting of cash and marketable securities, established for pension and sinking funds, are being enlarged. Mergers and consolidations also have their effect on fixed asset relationships in the accounting records. All of these factors and their relation to fixed asset accounts will shift from time to time depending upon the phase of the business cycle, the stability of the price structure, the degree of employment, and the stage of technology in our economy.
Harold G. Avery (Sun,) studied this question.