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Analysis of Agencies with Revenues Less than $500,000
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IV.
Profitability
- % of Net Revenues
(Agencies with Revenues Less than $500,000)
A. Profitability Ratios
Average +25% Profit +25% Growth
Pre-Tax Profit
9.2%
27.9%
17.7%
Pro Forma Pre-Tax Profit
(1)
15.2%
29.9%
17.1%
Operating Pre-Tax Profit
(2)
4.4%
17.2%
1.3%
(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.
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
% Net Revenue
Pre-Tax Profit
Pro Forma Pre-Tax Profit (1)
Operating Pre-Tax Profit (2)
Profitability
Average +25% Profit
+25% Growth
B. Growth in Profitability (% change from prior year)
Average +25% Profit +25% Growth
Net Revenues (Total)
0.3%
6.6%
10.0%
Compensation Expense
9.1%
11.6%
3.3%
Selling Expense
8.8%
5.3%
5.4%
Operating Expense
2.9%
3.6%
7.5%
Administrative Expense
-11.1%
-9.0% -24.5%
Pre-Tax Profit
-10.1% -11.8% -21.3%
Operating Pre-tax Profit
-16.9% -26.3% -25.1%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Average
+25% Profit
+25% Growth
Growth in Net Revenues
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
Average
+25% Profit
+25% Growth
Growth in Pre-Tax Profit