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