2000 Best Practices Study

VI. Financial Stability (Agencies with Revenues Between $5,000,000 and $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.

Top 25%

Average

Liquidity/Current Ratio

1.35:1

2.09:1

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)

9.9%

29.4%

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

57.9%

23.2%

2. Aged Receivables

Average

Top 25%

Over 60 Over 90

11.4% 2.1%

2.1% 0.9%

VII. Carrier Representation (Agencies with Revenues Between $5,000,000 and $10,000,000) Average +25% Profit +25% Growth Personal Lines National 6.0 5.0 6.3 Regional 3.0 3.0 2.3 Commercial Lines National 16.2 16.8 19.5 Regional 9.4 16.3 14.5 Total Carriers 34.7 41.2 42.7

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

15.5% 32.3%

25.6% 54.1%

12.8% 25.2%

Analysis of Agencies with Revenues Between $5,000,000 and $10,000,000

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