- sion of a prosperous year.
Reference to the figures for the total yearly sales, however, shows that the sales for the third year increased only very slightly over the preceding year. When we compare the sales of this branch house with the expenses, we get quite a different story from that read from sales curves alone. The increase in sales from the first year to the second year was very great and without a correspondingly great increase of expenses. Putting the figures for the first and second years into a ratio, sales increased 64 per cent, while expenses increased only 10 per cent. In the third year, however, the sales hardly increased at all, while the shape of the curve for expenses shows an almost constant increase. A little mental arithmetic will show further that with almost stationary sales the expenses were permitted to increase about one-seventh or, roughly, 14 per cent.
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Fig. 210. Profit and Loss of the "Metropolis" Branch House of the "R.S.T." Automobile Company for Three Consecutive Years
Read this curve in conjunction with the two curves of Fig. 209. Note the effects on profits of widely fluctuating sales and the effect of
expenses which were constantly increasing more rapidly than the volume of sales
Notice that in Fig. 209 arrow-heads mark a desire that sales should go up. No arrow was used in connection with the curve for expenses.
