| 65. |
|
Current
Ratio—Current assets divided by current liabilities. 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. |
| 66. |
|
Tangible
Net Worth—Total assets minus intangible assets equals total tangible assets. Total tangible assets minus total liabilities equals tangible net worth. 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. |
| 67. |
|
Receivables/Payables
Ratio—Accounts receivable divided by accounts payable. This ratio measures the collection practices of an agency, with a lower ratio representing more timely collections of those amounts due from insureds. |
| 68. |
|
Aged
Receivables—Measures the length of time that receivables are past due (over 60 days, over 90 days). Receivables aged greater than 60 days tend to have a magnified impact on the agency’s liquidity as payments are most always due to insurance companies on or before 60 days, thus forcing the agency to use its own funds to pay carriers. |
