2000 Best Practices Study
VI. Financial Stability (Agencies with Revenues Between $2,500,000 and $5,000,000) 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
1.41:1
2.04:1
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%
27.0%
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
68.8%
14.6%
2. Aged Receivables
Average
Top 25%
Over 60 Over 90
15.6% 20.3%
4.2% 2.9%
VII. Carrier Representation (Agencies with Revenues Between $2,500,000 and $5,000,000) Average +25% Profit +25% Growth Personal Lines National 5.9 5.7 4.9 Regional 4.0 3.0 2.6 Commercial Lines National 10.9 10.7 8.1 Regional 7.0 5.0 3.6 Total Carriers 27.8 24.4 19.1
% of Net Rev from Top Carrier % of Net Rev from Top 3 Carriers
17.6% 35.3%
16.5% 33.9%
12.9% 31.3%
Analysis of Agencies with Revenues Between $2,500,000 and $5,000,000
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