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Analysis of Agencies with Revenues Between $5,000,000 and $10,000,000
85 of 113
IV.
Profitability
-
% of Net Revenues
(Agencies with Revenues Between $5,000,000 and $10,000,000)
A. Profitability Ratios
Average +25% Profit +25% Growth
Pre-Tax Profit
11.6%
21.4%
11.8%
Pro Forma Pre-Tax Profit
(1)
15.4%
25.0%
15.7%
Operating Pre-Tax Profit
(2)
0.4%
9.0%
0.5%
(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