2002 Best Practices Study

Analysis of Agencies with Revenues Less Than $500,000

FINANCIAL STABILITY

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

1.28:1

1.94:1

B. Tangible Net Worth

ability to invest in new opportunities, develop new products, hire new employees, make other capital expenditures and handle stockholder redemption obligations. 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

Top 25%

Average

Tangible Net Worth (as % of Net Rev)

10.1%

31.1%

C. Receivables

1. Receivables/Payables 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 payables at a given point in time.) Average Top 25%

Receivables/Payables Ratio

65.6%

12.7%

2. Aged Receivables

Average

Top 25%

Over 60 Over 90

17.0% 12.1%

8.6% 2.3%

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