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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