Efficient Use of Finance Discussed
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" DROFITABILITY may be distasteful
—almost a dirty word, in these days when the pursuit of private profit is regarded by some as an ignoble pastime— but we unashamedly state it as the primary aim and best yardstick of efficiency in competitive business." This was claimed by M-r. S. J. Elliott, director of finance, Ford Motor Co., Ltd., when presenting a paper on "Planning and controlling an efficient use of financial resources" to the National Conference of the British Institute of Management in London yesterday.
Their efficiency formula, he said, was the percentage which profit before tax bore to total assets employed. Profit before tax was used, rather than profit after tax, so that efficiency at different points of time could be compared without the complication of changing tax rates.
In a small concern it may be possible to achieve optimum results by the exercise of judgment on the part of a single experienced and astute man. But in large concerns in a highly competitive world, affairs were so complex and implications so numerous that they were beyond the unaided comprehension of one man, or even a small body of men forming the top management of a company. Assistance was needed to distil a mass of facts and possibilities into a small number of alternative conrses of action.