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Letters from our readers

Letters on "Successful management," and "Imperfect cost guide raises questions."

By Letters From Our Readers | Updated on September 07, 2009

Successful management Chris Burand, your article was a good one, again (“Good statistics are key to management,” AA&B July 2009). Thanks for your insights. The EBITDA section is particularly good, as it does make a real difference in the value of an agency. When principals wax poetic about how their agencies are growing, it is usually bogus. It is especially misleading when agencies are growing through acquisitions. You always have to evaluate the sustainable cash flow an agency generates in relation to the capital expenditure it took to generate it. In MBA-land, it is called FCF (free cash flow). Keep the good articles coming. David A. Rocchio DAR The Rocchio Agency Carmel, Ind.

Imperfect cost guide raises questions Barry Zalma’s article (“Cost guide software isn’t perfect,” AA&B July 2009) isn’t clear on the second trial calculation of damages. Is the excess of policy limit and $240,000 (as given in the cost guide formula) or $310,030.57 (the bid from a general contractor)?

If a general contractor provided a bid of $310,030.57, why is the figure of $328,843 given as the “full replacement value” of their home? What’s the difference between the “replacement value” and the “full replacement value”? What does “full” add? Frank R. O’Connor O’Connor & Assocs. Insurance Dubuque, Iowa

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