2002 Best Practices Study

Analysis of Agencies with Revenues Greater Than $10,000,000

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

1.12:1

1.39:1

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.

Average

Top 25%

Tangible Net Worth (as % of Net Rev)

7.5%

26.1%

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

52.8%

23.9%

2. Aged Receivables

Average

Top 25%

Over 60 Over 90

20.3%

2.9% 1.1%

9.5%

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