8. Analytical expense depart ment manager should also be furnished with a depart mental analytical statement of expenses incurred or charged to his department during the period. As al ready mentioned if the executives do not wish the man ager to know the actual net profits of the department, they may, of course, load this expense statement with an arbitrary and fixed amount of overhead.
9. Departmental profit and loss information with reference to sales, purchases and ex penses should then be gathered together into a de partmental profit and loss account or statement, ar ranged in comparative form, covering similar prior periods, so that the department manager may be able to know how his department has progressed or fallen behind. These statements will also prove of ad vantage to the department head if he is called upon subsequently to furnish the executives with a budget estimate, or the probable income and expense of his department for an ensuing period.
10: Results expressed in statements indicate the trend of business more clearly than statements worked up in dollars and cents. Thus, for example, the department manager should be given the ratio of gross profits to sales; the ratio of net profits to sales; the ratio of salary to sales; and the ratio of advertising, interest and total expense to sales. These expense statements, as indicated above, should be furnished in comparative form. The fluctuations in percentages constitute an accurate gauge of departmental or company operation, undis turbed by increases or decreases in the amount of business done. In addition to these statements, the department manager should be furnished with the turnover of his department for the period.
Some executives object to the expense entailed and time consumed in preparing these reports. The time consumed may be materially reduced by the intro duction of printed forms, and the calculations may be shortened materially thru the use of calculating de vices. Others say that the information would not be used by the department heads. Often this latter statement is true, because the department heads are not competent to analyze many of the reports that would be presented to them. We occasionally find a good merchandise man who will succeed in making money for his department without the aid of comparative reports of progress. This type of man, however, is rather unusual, and it may not be wide of the mark to say that even a good merchandise man can profit by a study of results presented to him in proper form.
In some organizations it is customary to keep a per petual inventory and stock record by sizes and quali ties, and it is advantageous to furnish the head of a department, from time to time, with stock sheets show ing the condition of the stock. He will then be en abled to determine the lines or sizes or qualities, which are selling, and those which are moving slowly, and concentrate his attention on the problem of getting rid of the stock that is accumulating, or for which, perhaps, the proper demand has not been created.
11. Form of statistical statisti cal statement is characterized by two things: first, that it is expressed in figures, and second, that it relates to a number of things of which it is a condensed sum mary. The fact that a given make of automobile is sold for $3,000 is not statistical, but if the statement is that automobiles range in price from $500 to $5,000 it has the marks of a statistical statement. It is a fact expressed in figures relating to automobiles in general.
All statistical statements express or imply a com parison. It is of the utmost importance that this comparison be correctly stated and that the conse quences which are derived from it be rightly estimated.
The reader will recall what was stated regarding fallacious statistics, at the close of the first chapter. Statistical errors and statistical fallacies are for the most part not mistakes of figures, but wrong thinking about figures. It is evident that no rules can be de vised to save people from illogical thought; the most that can be done, in a negative way, is to avoid in• viting incorrect conclusions by the manner of stating the problem, and, in a positive way, to call attention to the need of careful analysis.
12. Statistical principal com parisons with which statistics deal, concern ( 1 ) the same things at different times, (2) a thing in rela tion to some larger thing of which it may be a part, and (3) one thing in its relation to something else which is supposed to influence it. Some of the chief characteristics of these principal types of comparison deserve brief consideration in connection with the uses of statistics in business.