There is little point in collecting data on a firm's financial performance if that data is not used to improve its performance. A firm’s fee income, fee-earning capacity and fees per fee earner are all critical indicators of its current financial performance. This Precedent provides a worked example showing how to analyse these indicators and undertake a modelling exercise to understand the potential financial impact if any of the current variable figures change.

To complete this analysis and modelling exercise you need to follow a three-step process:

1. •

   step 1—calculate key variables

2. •

   step 2—calculate and analyse the firm’s current fee income, fee-earning capacity and fees per fee earner

3. •

   step 3—undertake a modelling exercise to understand the potential financial impact of adjusting any of the variables

This Precedent illustrates how you would undertake steps 2 and 3 of this process.

A blank version of this Precedent is available for use—see: Analysing fee income, fee-earning capacity and fees per fee earner—blank.

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