2000 Best Practices Study

VI.

Financial Stability (Agencies with Revenues Less than $500,000)

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.

Top 25%

Average

Liquidity/Current Ratio

1.36:1

2.00:1

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)

9.7%

21.8%

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

88.9%

31.5%

2. Aged Receivables

Average

Top 25%

Over 60 Over 90

24.2% 12.9%

4.9% 6.1%

VII. Carrier Representation (Agencies with Revenues Less than $500,000 )

Average +25% Profit +25% Growth

Personal Lines National

3.3 4.1 4.0 3.3

2.7 4.8 2.0 2.8

2.2 3.8 2.0 2.8

Regional

Commercial Lines National

Regional

Total Carriers

14.7

12.3

10.8

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

34.8% 55.2%

33.0% 54.3%

29.3% 55.2%

Analysis of Agencies with Revenues Less than $500,000

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