ARM Index Falls as Debt Recovery Gets Tougher

The health of the ARM industry declined in the fourth quarter of 2007 to its lowest level in two years, according to an index tracking the business designed by a prominent industry consultant.

The Kaulkin Ginsberg Index fell 5.2 percent in the fourth quarter to 1,253.5, falling in tandem with the ailing U.S. economy. The index value is determined by using seven macroeconomic variables that impact the accounts receivable management industry.

Four of the variables contributed to the decline in the index, reflecting the increasing difficulty in the recovery or liquidation of bad debt, according to Paul Legrady, a Kaulkin Ginsberg director.

Legrady noted that during the quarter the unemployment rate rose from 4.7 percent to 5.0 percent; the market capitalization of publicly traded ARM firms fell from nearly $2.2 billion to $1.7 billion; the federal funds rate fell to 3.94 percent; and bankruptcy filings were on the rise.

A chart of the Index for 2007 looks like a walk up and down a mountain. It began at 1,316.4 in January, rose to 1,410.3 in May, then dropped precipitously in July, and again in December.

The KG Index was launched with an initial value of 1,000 as of January 2000. Rockville, Md.-based Kaulkin Ginsberg is a strategic advisor to the accounts receivable management industry. It publishes insideARM.com.