Liabilities.
The amount owing for merchandise, both not due and past due, and on notes, should be examined carefully. Rather than being over-estimated, like the assets, these figures are apt to be under-stated and should be checked We o8 far as posi ai-the hanks. Likewise with loans
m banks rom friends or Yelatives. If there be any doubt as to their correctness it is wise to write for a list of the friends who have loaned money and check this list thoroughly, writing direct to the parties, if necessary. The other items can also be checked up either through attorneys or banks.
The total yearly expenses of conducting the business should be compared with the total yearly volume of busi- ness. Insist on the applicant reporting his rent and clerk hire, and, if possible, his other operating expense. The size of the business will indicate about how much his total
operating expenses ought to be and if there is a wide varia- tfon, inquire into it.
In judging a credit, one should consider whether the party is turning his stock with a reasonable rapidity, or whether his capital is being tied up in accounts receivable. Some merchants are so good hearted that they are imposed upon by their customers in the matter of the accounts owing by them, and for the merchant’s own welfare, he should be forced to keep his accounts receivable within bounds.
Lastly, the references given should all be consulted. The exchange of ledger information is of particular value and helps to establish the item of merchandise indebtedness
