2000 Best Practices Study

VI. Financial Stability (Agencies with Revenues Between $1,250,000 and $2,500,000) 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.

Average

Top 25%

Liquidity/Current Ratio

1.19:1

1.74:1

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)

7.1%

25.7%

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

43.3%

7.2%

2. Aged Receivables

Average

Top 25%

Over 60 Over 90

12.3% 7.2%

6.6% 5.2%

VII. Carrier Representation (Agencies with Revenues Between $1,250,000 and $2,500,000) Average +25% Profit +25% Growth Personal Lines National 4.0 4.1 4.6 Regional 3.9 5.3 2.6 Commercial Lines National 6.4 5.4 8.0 Regional 5.0 6.0 3.6 Total Carriers 19.3 20.9 18.7

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

19.7% 38.4%

22.1% 39.4%

21.5% 38.0%

Analysis of Agencies with Revenues Between $1,250,000 and $2,500,000

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