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Financial KPIs - The 12 Key Metrics You Should Be Tracking

by Tom Wright, on Mar 26, 2018 6:20:14 AM

Financial KPIs are measurable values used by Finance Teams to measure and track their progress on specific business objectives. Further, these KPIs help determine how well finance teams are performing. We recently launched our new KPI tracking feature in Cascade. Since then we've been flooded with requests from people asking for examples of KPIs to help them build out their own. We've been compiling everything you need know about KPIs as part of our KPI mini-series. This post is a small supplement to that series, which provides 12 of the most common financial KPIs, we also include a brief description of why you may want to use it. We suggest you pick at least 2 KPIs for each of your key business objectives. Below you will find a list of teams for which we’ll be providing examples of KPIs for.:

Update - New post added: How to Write KPIs - 4 Step Approach

1.Financial KPIs (This guide)
2.KPIs for Sales Teams
3.KPIs for Marketing Teams
4.KPIs for HR Teams
5.KPIs For Customer Service Teams
6.KPIs for Health & Safety Teams
7.KPIs for IT Teams
8.Leading & Lagging KPIs for Your Business
9.KPI Examples - 84 Key Performance Indicators For Your Business
10.KPIs for Change Management

Check back regularly, or subscribe to our e-mail list to be the first to hear when your team goes live in the mini-series.

We've decided to kick things off with some of the most important examples of KPIs for running your business. Those that relate to your financial performance. Whether you've a dedicated finance team or not, these financial KPIs are critical to measuring the success of your business.

BONUS: We've prepared a free downloadable KPI cheat sheet for you to take away and keep forever.

Download Finance KPI Cheat Sheet

This cheat sheet will help you make sure your tracking all the right KPIs. Click the download button below.


Financial KPIs for Understanding your Profitability

These examples of KPIs are for helping you to understand how well your business is performing in terms of profitability. This can help you benchmark both internally and externally as well as help you to set growth targets over time.

Financial KPIs: Gross Profit Margin

Expresses your profits as a percentage of total sales revenues generated. Therefore, it gives you a high level view of how much profit you're making. Although, it doesn't factor in all expenses so shouldn't be used for detailed decision making. It is however useful for bench-marking your performance over time, or comparing your profitability to another similar company.

See example of KPI set-up in Cascade below.

financial KPIs

Financial KPIs: Net Profit Margin

NPM is the percentage of revenue remaining after operating expenses, interest and taxes have been deducted from total revenue. This gives a more accurate internal figure for understanding profit, but is less useful for comparisons outside of your company.
See example of KPI set-up in Cascade below.

financial KPIs

Financial KPIs: Monthly Recurring Revenue (MRR)

Monthly recurring revenue is a very popular metric for SaaS companies such as ourselves. This metric looks only at the revenue generated each month which will re-occur with little to no additional investment required. For example any customer who signs up to a recurring monthly subscription to Cascade increases our MRR.
See example of KPI set-up in Cascade below.

financial KPIs

Financial KPIs: Return on Equity (ROE)

Measures your net income against each unit of shareholder equity. Return on equity ratio not only provides a measure of your organization’s profitability, but also its efficiency. Less useful for startups, but an important KPI for established organizations.
See example of KPI set-up in Cascade below.

financial KPIs

Financial KPIs for Understanding your Liquidity

Being profitable is key, but if you're not able to pay your debts or stay liquid, you won't be around for long. These examples of finance KPIs will help do that.

Examples of KPIs: Current Ratio

Current Ratio weights your assets, such as accounts receivables, against your current liabilities, including accounts payable. The KPI is used to help you understand the solvency of your business.
See example of KPI set-up in Cascade below.

financial KPIs

Examples of KPIs: Accounts Receivable Turnover

Accounts receivable turnover shows you the rate at which you are collecting what is owed to you by customers. So, to calculate the KPI, take total earnings in a given period against your average accounts receivable for the same period. It's best to monitor this over time so  you can use it as an early warning system. It will help you identify customers starting to take longer and longer to pay. If this happens, it will impact your own liquidity soon enough.
See example of KPI set-up in Cascade below.

financial KPIs

Examples of KPIs: Runway & Burn Rate

These two simple KPIs work conjointly to help you understand how much time you have for survival in the worst case example of sales stopping completely. Simply calculate how much money you're are spending each month - this is your burn rate, then divide the total amount of cash you have available by this figure, to give you your runway in months.
See example of KPI set-up in Cascade below.

financial KPIs

Financial KPIs for Understanding your efficiency

If you're profitable and liquid, you've already passed some of the hardest tests in business. Now it's time to start measuring your efficiency as a business and trying to find opportunities to improve, which in turn will improve your profitability and overall stability.

Financial KPIs: Revenue per FTE

Employee costs usually make up the bulk of a company's expenses, therefore it's often useful to measure how much revenue you are actually generating for each employee in your company. This gives you an idea of whether or not you're making an appropriate amount of revenue for the size of your business.
See example of KPI set-up in Cascade below.

financial KPIs

Financial KPIs: Revenue per Customer

This gives you an idea of how much gross revenue you make per customer. How you calculate this will vary depending on the type of business. For that reason, we as a SaaS business look at the Life Time Value of a customer (LTV) based on what they pay in their subscription and how long a subscription typically lasts. If you were coffee shop you might instead look at the average spend in a visit.
See example of KPI set-up in Cascade below.

financial KPIs

Download Finance KPI Cheat Sheet

This cheat sheet will help you make sure your tracking all the right KPIs. Click the download button below.


Financial KPIs: Revenue Growth Rate

This KPI helps to ensure your business continues to grow at a target rate, measured by a percentage. Therefore, you would measure this monthly or on a 12 month rolling average basis.
See example of KPI set-up in Cascade below.

financial KPIs

Financial KPIs: Cash Conversion Cycle

Measures the time it takes to convert an investment in inventory or some other resource input into cash. This gives you an understanding of how long cash is tied up in inventory before the inventory is sold and cash is collected from customers.
See example of KPI set-up in Cascade below.

financial KPIs

Financial KPIs: Asset Turnover Ratio

This measures a company's ability to generate sales from its assets by comparing net sales with average total assets. For example, a ratio of .5 would mean that each dollar of assets generates 50 cents of sales.
See example of KPI set-up in Cascade below.

financial KPIs

Hopefully you've found our examples of KPIs for finance teams useful! Next up, we'll be taking a look at KPIs for sales teams. If you're looking for a platform to help you create and track KPIs for your business, then look no further than our strategy execution platform Cascade!

Topics:Cascading & Engaging People With Strategy

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