2003 Best Practices Study
Analysis of Agencies with Revenues Between $1,250,000 and $2,500,000
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
1.40:1
2.07:1
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.
Top 25%
Average
Tangible Net Worth (as % of Net Rev)
6.3%
28.8%
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
63.0%
13.6%
2. Aged Receivables
Average
Top 25%
Over 60 Over 90
-9.9%
8.3% 6.0%
-13.8%
Page 52 2003 Best Practices Study
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