80 / 97
Analysis of Agencies with Revenues
Between $5,000,000 and $10,000,000
FINANCIAL STABILITY
A. Current Ratio
Liquidity/Current Ratio
1.08:1
1.41:1
B. Tangible Net Worth
Average
Tangible Net Worth (as % of Net Rev)
6.1%
18.8%
C. Receivables
1. Receivables/Payables Ratio
Receivables/Payables Ratio
52.7%
14.6%
2. Aged Receivables
Over 60
14.0%
3.2%
Over 90
10.0%
1.0%
CARRIER REPRESENTATION
A. Number of Carriers Represented
Average
+25% Profit
+25% Growth
Personal Lines
National
9.0
6.7
16.3
Regional
4.1
4.6
5.4
Commercial Lines
National
21.2
9.0
33.1
Regional
8.3
5.3
10.9
Total Carriers
42.6
25.6
65.7
B. Commission Income as % of Net Revenue
Average
+25% Profit
+25% Growth
% of Net Rev from Top Carrier
12.4%
13.8%
15.2%
% of Net Rev from Top 3 Carriers
26.2%
28.2%
27.5%
C. Service Center Use
Total Pers'l Lines Commissions placed
in Carrier Service Center
11.2%
23.4%
4.3%
Total Comm'l Lines Commissions placed
in Carrier Service Center
1.3%
*
0.6%
are sufficient to meet a firm's short-term obligations.
Average
Top 25%
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.)
other capital expenditures and handle stockholder redemption obligations.
Top 25%
Average
Top 25%
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
Average
Top 25%
A current ratio greater than 1:1 indicates that cash and assets with short-term maturities
Page 80
2003 Best Practices Study