2003 Best Practices Study
Analysis of Agencies with Revenues Between $500,000 and $1,250,000
FINANCIAL STABILITY
A. Current Ratio A current ratio greater than 1:1 indicates that cash and assets with short-term maturities are sufficient to meet a firm's short-term obligations.
Average
Top 25%
Liquidity/Current Ratio
0.98:1
1.80:1
B. Tangible Net Worth The tangible net worth is an important measure as it represents the net value of the corporation if it were liquidated. A low or negative tangible net worth impacts a firm's ability to invest in new opportunities, develop new products, hire new employees, make other capital expenditures and handle stockholder redemption obligations.
Average
Top 25%
Tangible Net Worth (as % of Net Rev)
4.7%
17.7%
C. Receivables
1. Receivables/Payables Ratio This factor measures the collection practices of an agency, with a lower ratio representing more timely collections. (Calculated by dividing total receivables by total payables at a given point in time.)
Average
Top 25%
Receivables/Payables Ratio
43.1%
0.0%
2. Aged Receivables
Average
Top 25%
Over 60 Over 90
14.0%
2.9% 3.0%
4.9%
Page 37 2003 Best Practices Study
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