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Analysis of Agencies with Revenues Greater Than $10,000,000
101 of 113
IV.
Profitability
-
% of Net Revenues
(Agencies with Revenues Greater Than $10,000,000)
A. Profitability Ratios
Average +25% Profit +25% Growth
Pre-Tax Profit
8.8%
14.0%
9.7%
Pro Forma Pre-Tax Profit
(1)
13.2%
22.8%
11.6%
Operating Pre-Tax Profit
(2)
-0.3%
4.8%
0.2%
(1)
The agency’s pre-tax profit when discretionary expenses (bonuses, compensation, and perks) made for
the benefit of the owners, based solely on ownership, are removed, i.e. removing expenses that would not
be incurred if a third party owned the agency.
(2)
Pre-tax profit minus contingents, bonus, and investment income.
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
% Net Revenue
Pre-Tax Profit
Pro Forma Pre-Tax Profit (1)
Operating Pre-Tax Profit (2)
Profitability
Average +25% Profit
+25% Growth