5 Important Financial KPIs for Your Business

Financial KPIs for Business
Finance is the lifeline of all businesses. Therefore, to run a successful business, you need to focus on the vital financial key performance indicators (KPIs). Keeping a tab on these indicators will ensure that your business is steered in the right direction.

5 important Business KPIs your Financial Dashboard Must have

1. Sales Growth ratio

One of the basic parameters of any business, sales growth throws an insight on whether your business is growing, is stagnant, or if it is losing ground. Growth in sales is determined by comparing your current sales with that of the previous period. The sales growth ratio is expressed as a percentage. If your sales growth is negative or constant, it indicates you need to re-look at your sales and marketing strategies. 

2. Revenue Source

Revenue source digs deeper into your sales and finds as to from where your income is coming. It throws light on the profitable segments, which customer is giving you the most business, and more. An in-depth analysis of your revenue source will give important insights about the products or services and clients you should focus on. If all your revenue is dependent on just 1 or 2 clients, it is time you need to rework your strategy and develop new markets.

3. Gross Profit Margin

Gross profit margin is the difference between net sales and the cost of goods sold. This is one of the business analysis tools that shed light on the company’s ability to pay its operating expenses and whether it can invest funds for growth. Most businesses have robust Gross Profit Margin. 

4. Return On Investment

Return on investment commonly referred to as ROI is an indicator of how soon you will be able to recover your initial investment. ROI calculator is a common tool that will help you calculate your return on investment.

5. Employee Turnover Ratio

This is one of the key performance indicators for employees. It shows the number of people that left the organization as compared to the total number of employees. A high employee turnover ratio indicates you need to look at your policies, pay structure, working environment, and more. 

In today’s competitive business world, data driven decision making is crucial for a business to survive and grow. In addition to the ones mentioned above, several other financial KPIs are important for your business health. These key indicators offer deep insights into your business profitability and alert you by flagging when things go awry. This will help you take corrective measures. Be it working capital ratio, asset allocation, or debt to sales ratio, these financial KPIs speak volumes. 




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