2000 Best Practices Study

VI. Financial Stability (Agencies with Revenues Greater Than $10,000,000) 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

1.17:1

1.45:1

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 a % of Net Rev)

11.2%

33.7%

C. Receivables 1. Receivables/Payable 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 payable at a given point in time.)

Average

Top 25%

Receivables/Payables Ratio

51.0%

18.4%

2. Aged Receivables

Average

Top 25%

Over 60 Over 90

8.9% 2.4%

3.2% 1.6%

VII. Carrier Representation (Agencies with Revenues Greater Than $10,000,000) Average +25% Profit +25% Growth Personal Lines National 7.3 3.0 4.3 Regional 2.3 1.8 3.3 Commercial Lines National 33.5 12.7 19.0 Regional 20.5 4.3 15.3 Total Carriers 63.6 21.7 41.8

% of Net Rev from Top Carrier % of Net Rev from Top 3 Carriers

9.5% 18.5%

15.1% 25.3%

8.5% 16.0%

Analysis of Agencies with Revenues Greater Than $10,000,000

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