2003 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
1.17:1
1.48:1
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)
10.9%
31.9%
C. Receivables
1. Receivables/Payables Ratio
more timely collections. (Calculated by dividing total receivables by total payables at a given point in time.) This factor measures the collection practices of an agency, with a lower ratio representing
Average
Top 25%
Receivables/Payables Ratio
52.3%
17.8%
2. Aged Receivables
Average
Top 25%
Over 60 Over 90
8.2% 3.9%
2.8% 0.9%
Page 94 2003 Best Practices Study
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