There are some Key Performance Indicators (KPIs) that will deliver even more information about performance in a variety of areas. Some commonly used financial KPIs include.

Gross Profit Margin

  • To know whether you are appropriately pricing your goods and services.
  • Gross profit margin = (revenue – cost of goods sold) / revenue.
  • This margin should be sufficient enough to take care of your fixed operating expenses and then leave you with a reasonable profit at the end of the period.

Net Profit Margin

  • This ratio indicates how much of your revenue is profits.
  • Net Profit margin = net profit/ total revenue. This is a good benchmark to use for setting profitability goals.

Current Ratio

  • This ratio quickly tells you how liquid your business is at a given point in time.
  • Current Ratio = current assets/ current liabilities.
  • A Current ratio of less than 1 means that you  don’t have enough cash to pay your bills.
  • A more ideal figure is between 1 to 1.5

Leave a Reply

Your email address will not be published. Required fields are marked *