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An Honest Inventory
Should Liquidate Without Loss
A. P. McCoy, of McCoy's, Inc., Hartford, Declares This Is Possible
Whenever Affairs of Solvent Company Are Properly Managed—
His Able Handling of Sedgwick & Casey Affairs a Fine Example
E
VERY honest inventory of a retail busi- ume of sales during the three months period
ness should represent a tangible asset amounted to some $71,000 after running ex-
that, in the event of liquidation, should penses and other items were deducted.
bring into the company an amount of cash ex-
The creditors allowed Mr. McCoy an appro-
ceeding inventory figures if the case is properly priation of $4,000 for advertising in order to
handled. This is the opinion of A. P. McCoy, stimulate sales, and he managed to clean out the
president of McCoy's, Inc., of Hartford, Conn., stock with an expenditure of only about $3,000
and it was this opinion that influenced him when, for advertising, or 75 per cent of the appropria-
some two years ago, he assumed the responsi- tion. The entire sales force employed by Sedg-
bility of closing up the affairs of the old-estab- wick & Casey was used in carrying on the sale,
lished house of Sedgwick & Casey in Hartford,
for the protection of the creditors and the bene-
fit of the stockholders in the company. The
handling of this particular case was widely com-
mented upon by those who had become familiar
with it, and represents a bright chapter in music
trade affairs.
It was on June 15, 1925, that the Creditors'
Committee, acting for the firm of Sedgwick &
Casey, entered into a contract with McCoy's,
Inc., to attend the liquidation of the affairs of
that company, including the disposal of stock
on hand and the adjustment of the book ac-
counts. When Mr. McCoy and his assistants
took charge the inventory showed a stock on
hand of a value approximating $74,000, made up
of one item alone of $21,982, representing the
book value of 39,000 Victor records. It was
A. P . McCoy
just about the time that there came the break
in the retail price of talking machines and the McCoy interests adding only one man to
records and the result was that there was a di- direct affairs and an office employe to take care
rect loss in inventory on this item alone of
of other details, this office representative being
about 50 per cent.
no less a person than Mrs. A. P. McCoy herself,
The McCoy force first made its own inventory who, through association in business with her
of stock, and everyone of the 39,000 records was husband, has acquired a wide knowledge of re-
carefully counted and classified, a task that kept tail music trade practice.
the workers thinking and dreaming of records
The sale was not conducted on a less than
for a considerable period.
cost basis, each item sold showing a fair margin
The same rule was followed with the other of profit. This even applied to the records, tak-
items of stock, and then the book accounts were ing into consideration, of course, the decreased
carefully audited and inspected as the first step inventory value of those items.
The final outcome of the liquidation program
towards proper liquidation. It was on the basis
of the inventory and audit that McCoy's, Inc., was that from moneys realized through the dis-
expressed confidence in the ability of the com- posal of stock on hand and the clearing up of
pany's staff to bring in enough money to pay book accounts, the creditors were paid over
creditors in full and leave something for the $121,000 in cash within a period of twenty-two
months from the time McCoy's, Inc., took charge,
Sedgwick & Casey stockholders.
So successful were the efforts of the liquida- and there was left in addition more than $45,000
tion force that although they did not take charge to be turned over to the Sedgwick & Casey
until June 15, and there were 48 pianos out on stockholders.
In many respects this liquidation of the Sedg-
rental at the time, September 15 saw the situa-
tion cleared to an unbelievable degree. They wick & Casey business affords an outstanding
had disposed of practically everything in the example of business ability. Mr. McCoy, him-
line of merchandise that was salable with the self, although he naturally directed the cam-
exception of about $1,500 worth. The total vol- paign, did not appear in the running of the sale
IT.
ESTABLISHED 1862
E~~
The Hockett-Cowan Music Co., of Visalia,
Cal., has moved from its store at 200 West
Main street to new quarters in the Bank of
Italy Building on East Main street.
L^UTER
ONE OF AMERICA^FINE
-
until it was about one-half over. His high re-
gard for Mr. Sedgwick of the Sedgwick & Casey
house prompted him to assume the task in order
to prevent the loss of what he regarded as a
splendid equity in both inventory and accounts
receivable. Mr. McCoy was able also to apply
in the Hartford case the knowledge gained in
the successful liquidation some years ago of the
Driggs & Smith Co., of Waterbury, although in
that instance only the merchandise and not the
book accounts were handled.
"I believe this is the only method of success-
fully liquidating the affairs of any firm selling
merchandise on instalments," said Mr. McCoy.
"Any concern that is alive and shows a reason-
able surplus over liabilities should, in any case,
pay out nearly 100 cents on the dollar unless the
inventory is not accurate. What we did in the
Sedgwick & Casey matter can be done in many
other cases where the affairs of an honest and
substantial concern must be liquidated for one
reason or another. It is quite possible also, as
in our case, to conduct a liquidation sale in a
manner that casts no reflection on the permanent
trade of the city.
"It is particularly significant in my opinion,"
he continued, "that we managed to clear up
the Sedgwick & Casey obligations and to have
something left for the stockholders in spite of
the substantial losses incurred through a 50 per
cent reduction in record prices. I t serves to
prove that any honest and fair inventory of
merchandise and instalment accounts that has
been accepted on a sound credit basis can be
made to pay out in full, and in the case of mer-
chandise itself, at a fair profit over book valua-
tion. I should be very glad to give the benefit
of our experience in the Sedgwick & Casey
matter to other members of the trade who may
face a similar liquidation problem."
The McCoy method of handling the liquida-
tion appears to be so strongly in contrast with
methods that have been adopted in other cases
where the efforts seem to have been directed to-
wards clearing up the situation in good time
without any serious consideration of the amount
of money that might be lost through haste and
carelessness that The Review feels that the
trade at large should find much of interest in
the general outline of the accomplishment.
NEWARK N J.
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PIANOS
UPRIGHTS "EEE
GRANDS
THE LAUTER-HUMANA