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Financial KPIs
Handbook
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 ACCOUNTING KPIS YOU SHOULD KNOW
Name Description Formula

Measures the percentage increase or ((Current Period Revenue -

Revenue Growth Rate decrease in revenue over a specific period, Previous Period Revenue) /
indicating the company's ability to generate Previous Period Revenue)
more sales. x 100

Measures the percentage of revenue that

remains as net profit after deducting all (Net Income /
Net Profit Margin expenses, providing insights into the overall Revenue) x 100
profitability of the company.

Evaluates the efficiency and profitability

Return on Investment of an investment by measuring the return
(Net Profit /
(ROI) generated compared to the initial investment. Initial Investment) x 100

Determines the profitability of a company's

Return on Assets (ROA) assets by measuring the net income (Net Income /
generated per unit of total assets. Total Assets) x 100

Measures the profitability of shareholders'

(Net Income /
Return on Equity (ROE) investments by assessing the net income
generated per unit of shareholders' equity. Shareholders' Equity) x 100

Assesses the proportion of a company's Shareholders' Equity / Total

Equity Ratio total assets financed by shareholders' equity. Assets

Measures the company's ability to pay its

Current Ratio short-term obligations with its current assets, Current Assets /
indicating its short-term liquidity position. Current Liabilities

Assesses a company's ability to manage its

debt obligations, and measures how many
Debt / EBITDA Ratio times the company's earnings can cover its
Total Debt / EBITDA
debt payments.

Assesses the company's cash flow available

Debt Service Coverage to cover its debt service, including interest EBITDA / Total Debt Service
Ratio (DSCR) and principal payments.

Evaluates a company's profitability and

EBITDA Margin operating efficiency by measuring the (EBITDA / Total Revenue)
percentage of revenue represented by EBITDA. x 100

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 CASH KPIS YOU SHOULD KNOW
Name Description Formula

Profit before Tax – Tax Paid +

Cash Flow from Operations Measures the net cash generated or used Non-cash Expenses (e.g. depre-
in the business's regular operations.
(CFO) ciation) - Changes in Working
Capital

Shows the proportion of current assets

to current liabilities and indicates the Current Assets / Current
Current Ratio company's ability to pay off short-term Liabilities
obligations.

Quick Ratio Similar to the current ratio but excludes

(Current Assets - Inventory) /
inventory, providing a more immediate
(Acid-Test Ratio) measure of liquidity.
Current Liabilities

Measures the average number of days it (Average Inventory / Cost of

Days Inventory Outstanding takes for a company to sell its entire Goods Sold) x Number of
(DIO) inventory. Days in the Period

Measures the average number of days (Accounts Receivable /

Days Sales Outstanding it takes for the company to collect Total Credit Sales) x
(DSO) payments from customers. Number of Days in Period

Measures the average number of days (Accounts Payable / Total

Days Payable Outstanding it takes for the company to pay its Credit Purchases) x Number of
(DPO) suppliers. Days in Period

Cash Conversion Cycle Calculates the time it takes for a com-

pany to convert its investment in in- DIO + DSO – DPO
(CCC) ventory into cash from sales.

Indicates how quickly the company is (Beginning Cash Balance -

Cash Burn Rate using up its cash reserves over a specific Ending Cash Balance) /
period. Number of Months

Cash Runway Measures the number of months until the Current Cash Balance/ Cash
cash runs out. Burn Rate

Represents the cash available to the

company after all expenses, investments, Cash Flow from Operations -
Free Cash Flow (FCF) and other cash flows have been Capital Expenditures
accounted for.

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 INVESTORS KPIS YOU SHOULD KNOW
Name Description Formula

(Net Income - Preferred

Earnings Per Share Shows the amount of profit generated
Dividends) /Average
(EPS) for each outstanding share of stock.
Outstanding Shares

Indicates how much investors are

Price-to-Earnings Ratio Stock Price/ Earnings
willing to pay for each dollar of
(P/E Ratio) earnings.
Per Share

Measures the profitability generated Net Income / Average

Return on Equity (ROE) from shareholders' equity. shareholders' Equity

Evaluates the proportion of debt Total Debt / Shareholders'

Debt-to-Equity Ratio financing compared to equity financing. Equity

Assesses the percentage of sales

(Gross Profit /
Gross Margin revenue remaining after deducting
Revenue) x 100
the cost of goods sold.

Shows the profitability of core (Operating Income /

Operating Margin business operations before interest Revenue) x 100
and taxes.

Measures a company's short-term Current Assets /

Current Ratio liquidity and ability to meet immedi- Current Liabilities
ate obligations.

Assesses a company's ability to cover

(Cash + Accounts
short-term obligations with its most
Quick Ratio liquid assets (such as cash, cash
Receivables + Marketable
(Acid-Test Ratio) Securities) / Current
equivalents, account receivables and
Liabilities
marketable securities).

Return on Investment Evaluates the return earned from an (Net Profit from Investment/
investment relative to its cost. Cost of Investment) x 100
(ROI)

Measures the annual dividend income (Annual Dividend Per

Dividend Yield relative to the stock price. Share / Stock Price) x 100

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 INVENTORY KPIS YOU SHOULD KNOW
Name Description Formula

Inventory Turnover Measures how many times inventory Cost of Goods Sold (COGS)
is sold and replaced within a specific / Average Inventory
Ratio period.

Days Inventory Indicates the average number of days 365 days / Inventory
Outstanding (DIO) it takes for inventory to be sold. Turnover Ratio

Represents the expenses associated

with storing and maintaining inventory. (Inventory Holding Cost /
Inventory Carrying Cost Total Inventory Value) x 100
Includes costs like storage, insurance,
depreciation, and opportunity cost.

Measures the frequency of running out (Number of Stockouts /

Stockout Rate of stock on a specific item. Total Demand) x 100

Measures the percentage of customer (Total Orders Fulfilled /

Fill Rate orders that can be fulfilled immediately
Total Orders) x 100
from available inventory.

Measures the time it takes to receive Order Placed Date – Order

Lead Time inventory after placing an order. Received Date

Measures the accuracy of recorded

Inventory Accuracy (Total Actual Inventory / Total
inventory levels compared to actual
Recorded Inventory) x 100
physical inventory.

Measures the ratio of current inventory

Current Inventory / Average
Stock-to-Sales Ratio levels to average daily sales. Helps
Daily Sales
predict if excess inventory is being held.

Obsolete Inventory Measures the percentage of inventory (Value of Obsolete Inventory /

Ratio that is no longer saleable or usable. Total Inventory Value) x 100

Gross Margin Return Measures the profitability of inventory (Gross Margin / Average
on Inventory Investment investments relative to their cost. Inventory) x 100

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 GROWTH KPIs YOU SHOULD KNOW
Name Description Formula

Measures the increase in revenue over

((Current Revenue - Previous Revenue)
Revenue Growth a specific period, typically expressed / Previous Revenue) x 100
as a percentage.

Customer Acquisition Calculates how much it costs to Total Cost of Sales and Marketing /
acquire each new customer. Number of New Customers Acquired
Cost (CAC)

Assesses the total value a customer Average Purchase Value ×

Customer Lifetime Average Purchase Frequency × Average
brings to the company throughout their
Value (CLV) entire relationship.
Customer Lifespan

Monitors the rate at which customers (Number of Customers at the Start of

the Period - Number of Customers at
Churn Rate stop using or subscribing to your the End of the Period) / Number of
product or service. Customers at the Start of the Period

Monthly Recurring Tracks the predictable and recurring Average Revenue Per User x Number
of Customers
Revenue (MRR) revenue generated.

Measures customer satisfaction and

Net Promoter loyalty by asking how likely customers (% of Promoters) - (% of Detractors)
Score (NPS) are to recommend your product or
service to others.

Measures the level of satisfaction that

Customer Satisfaction customers have with your product, (Number of Satisfied Responses /
Score (CSAT) service, or overall experience, typically Total Responses ) x 100
measured through surveys.

Evaluates your company's portion of (Your Company's Sales / Total Market

Market Share the total market in terms of revenue. Sales) x 100

Determines the percentage of ((Number of Customers at the End of

Customer Retention customers who continue to use your the Period - Number of New Customers
Acquired) / Number of Customers at
Rate product or service over time. the Start of the Period) x 100

Calculates the percentage of revenue

remaining after deducting the cost of ((Revenue - Cost of Goods Sold) /
Gross Margin goods sold (COGS), which reflects your Revenue) x 100
profitability.

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