2000 Best Practices Study
IV. Profitability - % of Net Revenues (Agencies with Revenues Greater Than $10,000,000) A. Profitability Ratios Average +25% Profit +25% Growth Pre-Tax Profit 8.8% 14.0% 9.7% Pro Forma Pre-Tax Profit (1) 13.2% 22.8% 11.6% Operating Pre-Tax Profit (2) -0.3% 4.8% 0.2% (1) The agency’s pre-tax profit when discretionary expenses (bonuses, compensation, and perks) made for the benefit of the owners, based solely on ownership, are removed, i.e. removing expenses that would not be incurred if a third party owned the agency. (2) Pre-tax profit minus contingents, bonus, and investment income.
Profitability
25.0%
20.0%
15.0%
10.0%
5.0%
0.0% % Net Revenue
-5.0%
Pre-Tax Profit
Pro Forma Pre-Tax Profit (1)
Operating Pre-Tax Profit (2)
Average +25% Profit
+25% Growth
Analysis of Agencies with Revenues Greater Than $10,000,000
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