2002 Best Practices Study
Analysis of Agencies with Revenues Between $2,500,000 and $5,000,000
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
1.31:1
1.98:1
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.
Top 25%
Average
Tangible Net Worth (as % of Net Rev)
-1.1%
15.8%
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
70.4%
14.0%
2. Aged Receivables
Average
Top 25%
Over 60 Over 90
16.0%
4.4% 2.4%
9.0%
72
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