United States

  • United Kingdom

New Zealand

Meru Accounting

  • Work Methodology
  • What Our Clients Say
  • Award-Certificates

We provide services to any type of industry, a few are listed below.


Take a free, 6-hours of free trial now

It will include Phone, Skype and Email support.

Key Financial Indicators for Business


Things to check after getting your financial statements

Every business strives to achieve growth and maintain the proper workflow in its organization. Financial statements are essential to know the overall condition of the company. Most companies today make appropriate financial statements by maintaining financial records in their business. However, when it comes to analyzing the financial statements thoroughly, many of the companies do not know what to look for in the financial statements to understand the overall condition of the business. That is why financial statements are significant for making many of the vital business decisions. Hence, there are some fundamental economic indicators that business owners should check thoroughly. It helps to know the essential insights of the business.

Here are some essential things to check in the financial statements:

Gross profit ratio:, net profit ratio:, current ratio:, liquid ratio:.

These are some essential financial indicators of a business , giving an excellent insight into the market. Another thing necessary for the business is the sales of the company. There are some critical sales things to be checked out for the business.

Here are some sales things to check out for a business:

Bestselling SKU (Stock Keeping Unit): The SKU is the machine-readable bar code, and they are more particularly used to show the sale of the product and inventory. These products are the most current product in the market.

Profit per SKU(Stock Keeping Unit): Profit per SKU tells the profit being earned on each of the stocks. It shows the primary source through which the company gets the maximum benefit from an inventory.

As the captain of the ship should know all the heavy machines and instruments in the boat. All business owners must know all these important financial indicators of the business .

financial indicators in business plan

Related Posts

Role of Accounting in Business

Role of Accounting in Business

Continue reading

5 Essential Bookkeeping Tips for Small Business

5 Essential Bookkeeping Tips for Small Business

best business structure in India

What is the best business structure in India?

Outsourcing Benefits in Business

How Does Outsourcing Benefits Business?

Entity type selection for entrepreneur in India

Entity type selection for entrepreneur in India

why business owners should approach meru for their bookkeeping requirements

Reasons why business owners should approach meru for their bookkeeping requirements

Scorp vs LLC

Scorp vs LLC

Bookkeeping service for Australia

Importance of customer service as part of virtual bookkeeping services

Debit and Credit in Bookkeeping

Understanding Debit and Credit in Bookkeeping


Do you believe your Bookkeeping fees are too high?

Select your country.

financial indicators in business plan

Request Call Back

Phone Number

This will close in 30 seconds


The 9 Most Important Financial Key Performance Indicators For Your Business

You don’t have to be a chartered accountant to understand the benefits that key financial indicators can bring to your business. As a business owner, you should at least have a cursory knowledge of how your balance sheets, accounting practices and financial performance affect the bottom line of your enterprise.

Here’s a quick guide to the 9 most important financial key performance indicators (KPIs) for you to use in your business metrics.

First things first – do you know how to calculate profit? If you don’t, listen up! It’s one of the most important financial key performance indicators you should keep track of for your business.

Luckily, it’s not that difficult. There are  two levels of profit  that gives you different insights about your business.

Gross profit = sales revenue − the cost of sales Your sales revenue is the amount of money you get from making sales. Your cost of sales is any expense directly related to the cost of making your goods or delivering your services. It’s known as a variable cost because these costs will depend on the number of items you’re selling.

Net profit = gross profit – other operating expenses and interest Net profit differs from gross profit because it includes the non-variable costs of operating your business, known as your fixed costs. These are things like rent, debt payments, utility bills and staff wages. These costs are also commonly referred to as overheads.

Let’s use a self-employed contractor as an example. To calculate your gross profit all you have to do is add up all your sales (such as contracts and other services) and subtract your business costs for making those sales (such as subscription services or travel).

Then, to find your net profit, you subtract your fixed costs on top of that. For instance, if you pay rent for an office space or have to pay outsourced staff, then those get subtracted before finding your real “net” profit of operating your business.

Your net profit is the easiest way to tell if your business is sustainable. But don’t be fooled into thinking it’s the only indicator you need to measure.

Free 15-minute call

Book a free 15-minute call with one of our business coaches today

Business, Career, Performance, Wealth, Life, Health, Psychology, Personal Development Coach

I’m passionate about inspiring women to lead with confidence, to stand tall (in bare feet) and to ow…

Business, Career, Personal Development, Executive Coaching, Wealth, Team performance Coach

                                                                                                                                                                                                    Post Graduate in Leading and Managing People, Accredited Coach with IAPC&M, Qualified Financial …

Maria Jose Jareno

Business, Executive Coaching, Team performance Coach

                                                                                                                                                                                                    As an ICF certified coach with over 15 years of international banking experience, I support leaders …

2. Gross Profit Margin

There are more enlightening ways to express your business profit. One way is with the gross profit margin.

This term expresses your  profit in relation to your sales revenue .

Gross profit margin (%) = (Gross profit / Sales revenue) x 100

This calculation will give you a neat way to express how much value your business is adding during your operations. For instance, even if your sales revenue doubled in the past year, have you looked at your margins? If your gross profit margin drops from 30 per cent to 20 per cent while your sales revenue doubled, it could be an indication that you could do things more efficiently. It might tell you whether your products or services are priced appropriately or whether you can lower your input costs to boost profit.

Be sure to check your gross profit margin over time and also compare your financial key performance indicators to the industry average.

3. Net Profit Margin

Your  net profit margin  is similar to the previous indicator, except it takes into account your overhead costs. It’s the relative amount of sales revenue that’s left over after you pay your full costs.

Net profit margin (%) = (Net profit / Sales revenue) x 100

It’s the simplest way to express how much profit you take home for every euro (€) earned in sales. If you make €80,000 in sales this year and your net profit is €45,000, then congratulations – your net profit margin is 56 per cent. That’s pretty good!

Try comparing your net profit margin with your gross profit margin. That kind of analysis can tell you the impact of your fixed costs on your business operation.

4. Solvency

Do you know if your business is  solvent ?

The term has a negative connotation to it, but that’s only because it typically goes unchecked until it’s too late.

In reality, it’s an excellent financial key performance indicator that you should be monitoring for your business. Your solvency can be calculated with the following ratio:

Current Ratio (solvency ratio) = current assets / current liabilities

Let’s break these terms down:

Your current assets are all the resources you have available to convert to cash within one year. That can include the cash in your account or your existing inventory. Your current liabilities are the financial obligations that you owe within the current year. If you commit a future outflow of cash, then you have a liability. Common business liabilities are leases, loan repayments and payments owed to suppliers.

What does this tell us? It’s essential to monitor your company’s ability to meet its financial obligations. If your business has a positive (greater than 1:1) current ratio, then it’s considered solvent. If so, you can pay off your debts over the long term.

Your solvency ratio is an essential financial key performance indicator of your business maturity and sustainability that you simply can’t ignore!

5. Working Capital

Your  working capital calculation  is similar to solvency because it uses assets and liabilities to depict the health of your balance sheet. The only difference is that instead of creating a ratio, it’s the difference between them:

Working capital = Current assets – current liabilities

It’s a very similar way to calculate the inflow and outflow of cash that results directly from your day-to-day operations. If your working capital is negative, then that tells you that you run a deficit to operate your business, at least during the given period. That could be troubling, and it might happen if you have to rely on debt to last you through to your next sales.

Keep an eye on your working capital calculation and try to keep it positive by relying on fewer (or faster) inventory stocks or trying to get customers to pay up sooner rather than later.

6. Liquidity Ratio (quick ratio)

While solvency is your company’s ability to meet long-term obligations, your liquidity ratio can tell you about your ability to meet debts and obligations in the short-term.

Your liquidity is how fast you can convert your assets to cash. To illustrate using an extreme example – if you have a warehouse of product inventory and the bank knocking at your door, how fast can you sell your stock to pay off your debts?

In reality, solvency and liquidity are often confused or used interchangeably. However, the most crucial difference is in knowing how “liquid” your assets are. There’s a handy financial key  performance indicator  you can use to calculate whether you can meet your short-term financial obligations:

Quick Ratio = (Cash and Cash Equivalents + Marketable Securities + Accounts Receivable)/(Current Liabilities)

6. Debt to Equity Ratio

The debt to equity ratio is another financial key performance indicator to determine your company’s ability to repay financial obligations.

Sure, borrowing cash is great because it lets you launch your business and can give you the flexibility to invest in growth. However, it can be an overwhelming presence if you let debt take over your financial statements.

Are you looking for a way to figure out how much of your business assets are financed through debt? That’s where the debt to equity ratio (or D/E ratio) comes in.

D/E ratio = Total debt / Total equity

How does it work? Well, a D/E ratio of 1.0 means that your company has an equal balance of debt compared to equity.

As an example, to find your total debt, you’d add up all the loans you’ve taken on such as a mortgage for office or warehouse space (-€240,000).

The total equity you have in your business is what actually belongs to you, (as opposed to the banks or creditors). Let’s say after a great year in sales you put down a nice €120,000 toward the principal on your mortgage.

Therefore, your D/E ratio = €240,000 / €120,000

That’s a ratio of 2.0, which tells you that for every €1 you have in equity, you still also owe €2. That’s not a great place to be, but it’s not uncommon for startup businesses.

7. Net Cash Flow

In some way, you probably track the inflows and outflows of cash in a given period, whether monthly or quarterly.

The difference in how much cash you take in and how much you send out is your  net cash flow . More specifically, it arises from considering three cash-related factors.

Net cash flow = cash flow from operations + cash flow from investing + cash flow from financing

On your cash flow statement, you’ll likely have several categories for how much cash you have on hand. To illustrate, we’ll look at a simple manufacturing example for month-to-month cash flow:

Operating activities (you sell some products to other vendors): +€10,000 Investing activities (you purchase more machinery and have to repair some old equipment) -€3,250 Financing activities (you repay some of your loans) -€1,250

The sum of these cash activities is, therefore, €5,500. That’s cash that you have leftover at the end of the month. You can rollover those liquid assets into the next month to pay for investments or simply keep it available for a “rainy day”. Avoiding  business cash flow problems  is essential for any business.

9. Sales Growth

Your  sales growth  is the percentage increase in sales over a given time period. It’s a very important financial key performance indicator to monitor closely for any business. It’s common for businesses to calculate it monthly and annually to figure out whether the demand for products or services is increasing or decreasing. in certain industries sales are seasonal, if that’s relevant for your business it can be useful to compare sales to the same period last year.

Sales growth = [ (Net sales for the current period – net sales for the prior period) / net sales for the prior period ] x 100

Let’s say you want to figure out your sales growth between 2018 and 2019.

In 2018 you sold €120,000 worth of services. In 2019, that figure was €131,000.

Sales growth = [(€131,000 – €120,000) / €120,000 ] x 100

Once you run the numbers, you’ll see that your sales grew by 9.2 per cent!

That’s all for now! We hope you enjoyed reading about these 9 essential financial key performance indicators (KPIs) that you can use to monitor the financial wellbeing of your small business. Using them will improve your own financial literacy and help inform your decision-making to operate and improve your business. If you want to learn more about managing your business check out our related blogs: How to improve time management ,  how small business coaching can help your business  or how to  find the right staff for your business .

Book a free call with one of our business coaches today for help with the Key Performance Indicators for your business

Oliver Deacon

Business, Personal Development, Wealth Coach

I help leaders develop their careers and build teams of the future. I’m a former Microsoft Finance D…

Amel Murphy

Business, Career, Personal Development Coach

Over 20 years experience at running and leading businesses globally. Business Mentor to startup owne…

Sue Gammons

Business, Career, Personal Development, Performance, Wealth, Life, Executive Coaching, Team performance Coach

                                                                                                                                                                                                                                                 I’m an Accredited Executive Coach with 10+ years’ experience of coaching business leaders to shi…

financial indicators in business plan

Programmes at Upskill Coach

Developmental Coaching

At Upskill Coach, our focus is to improve all aspects of your business starting with your people. We assist individuals, teams, and organisations in finding clarity in the chaos of today’s world by adapting their thinking to realise better results.

Want to Learn More?

If you have any questions or concerns, feel free to get in touch.

Our customer service team is always available to address your questions or concerns.

Top 11 Key Financial Performance Indicators for better business financial and operations analysis

Blog detail.

Formulas of Ratio analysis

It is not just important but necessary to regularly check your business’s financial health. You define certain key performance indicators (KPIs) to measure performance and take corrective actions in business strategy wherever required. It gives you a holistic view of your business operations.

Our expert team of accountants has enlisted such indicators to assess financial performance in various areas of your organization. It will help you analyze and grow your business exponentially.

All Finance and Accounting Outsourcing companies keep this indicator in their mind and assess the performance of an organization.

How is financial performance measured?

Here are the indicators to assess financial performance in various areas of your organization

Gross profit margin

This factor tells you whether the price of your product/goods is fundamentally right or not. Gross profit margin is basically the overall profit you gain without covering up all the fixed operations costs. Hence, better margins equal better profits.

Here’s the simple formula to calculate Gross profit margin:

Gross profit margin = (revenue – the cost of goods sold)/Revenue

Sounds like the primary reason for your business. Doesn’t it? This is what you have ultimately after paying all your bills. Simply put, deduct your total expenses from the total revenue to calculate your net profit.

Let’s assume, your total billing is $2, 00,000 and your monthly rent, employee salaries, and other fixed cost expense collectively add up to $1, 20,000. Your net profit is $80,000.

Debt asset ratio

The Debt asset ratio is your assets financed with debt. It is, in other words, telling you the financial leverage used in your business.

The higher ratio indicates financial risk, so as a business owner, you should have the proper mix of shareholders’ funds and debt wisely. This is a critical KPI to determine the credibility of your business in the eyes of investors as well as customers.

Working capital

It is the capital; a business needs to run its day-to-day activities. Working capital is basically the liquidity available for ongoing business operations.

Working capital = Current assets – Current liabilities

The optimum level of working capital helps in attaining better operational efficiency. This indicator suggests you keep enough positive difference between current assets (accounts receivable, cash, etc.) and current liabilities (accounts payable, provisions etc.) for smooth business operations.

Here you can read How Does Accounts Receivable Management Help Optimize The Working Capital?

Operating cash flow

It is essentially the amount of cash that your business produces through your regular business operations such as Sales, purchases etc. It is important that your business operations generate sufficient cash flow to be more financially independent.

Operating Cash Flow (OCF) = Operating Income (revenue – the cost of sales) + Depreciation – Taxes +/- Change in Working Capital

Positive cash flow indicates a promising future and negative cash flow signifies raising additional capital or debt in your business.

Return on equity

Return on equity (ROE) is the measurement of a company’s profitability. It represents the rate of returns, stockholders receive from their investments. It indicates the financial performance of a company in relation to shareholders’ money.

ROE = Net Income or Profits/Shareholder’s Equity

A good ROE brings trust among shareholders and attracts other investors.

Debt to equity ratio

The debt to equity ratio is an important KPI to determine the financial accountability of your business. It is calculated looking at your total liabilities against equity.

Debt to equity = Total liabilities/Total equity

It gives you a better understanding of your capital structure. It is basically the financial leverage ratio to measure your company’s ability to meet short and long term obligations.

Quick ratio

As the name suggests, the Quick ratio is the fastest way of assessing a company’s financial position. It is the company’s current ability to pay off liabilities and debts with readily available liquid assets.

It is also known as the “Acid test”. It shows the financial performance and flexibility of your company.

Inventory turnover

There is a non-stop inventory flow in and out of your warehouses. Inventory turnover represents the number of times, your company sells and replaces inventory in a specific time period.

Inventory turnover = Cost of inventory sold/Average inventory value

It ensures that you don’t have excessive inventory compared to your sales. It gives you vital details of your sales and production planning for better efficiency of operations.

Accounts payable turnover

Accounts payable turnover is the rate at which your business pays to its suppliers. This is an interesting KPI to figure out and prepare cash flow as well as find flow planning.

Accounts payable turnover = Total suppliers purchases/Average accounts payable

If the ratio declines, it indicates a decrease in payment frequency to suppliers which is a negative sign of financial position. Delay in payments could deprive you of vendors’ early payment discounts.

Accounts receivable turnover

Accounts receivable turnover indicates the rate at which your business collects due payments. This KPI ensures that you receive funds in a timely manner which is extremely crucial for your business. This KPI helps in cash flow planning, determining credit policy, and sales discount policy.

Accounts receivable turnover = Sales/Average accounts receivable

It evaluates your credit policy, a high turnover suggests an aggressive collection policy and a low turnover suggests inadequate inflow of funds.


Evaluating financial performance is an essential part of any business. It will significantly contribute to your long-term success. We hope these 11 financial KPIs help you measure your business growth as well as prepare budgets and business strategy. For any financial queries or consultation, CapActix would be happy to assist. Write to us at [email protected] or call us at +1 201-778-0509 .

Recent Blog

Financial Fundamentals II

5 financial indicators every entrepreneur should monitor

2-minute read

Proper financial management is crucial because it allows you to make timely, well-informed decisions in response to changing conditions.

Surprisingly, many entrepreneurs look at financial reports only at year-end or even a few months later when financial statements become available. That lack of attention is putting their business at risk, says Jorge Henao, a BDC  Business Consultant specialized in financial management and strategy.

Review your indicators every month

You have to be disciplined in reviewing financial data at least on a monthly basis and conducting more thorough analysis every quarter, Henao says.

You want to compare your company’s performance to objectives set out at the beginning of the year, based on a long-term strategic plan. You then make adjustments as necessary throughout the year to accomplish the objectives.

"You want to make decisions at the right time," he says, "If you wait until year end to address issues, it will probably be too late."

5 key indicators

Henao says key financial indicators fall into these categories:

Moreover, it’s critical for entrepreneurs to project and monitor cash flow, Henao adds. Even a company that is generating profits can quickly find itself in trouble if it doesn’t have enough cash to operate. Thus, you should know your financing needs in advance in order to manage your business proactively.

"If the business is growing, you are most likely going to require financing for receivables, inventory, machinery and equipment to hire more people, etc. If you wait until you need the funds, you’re putting the company in jeopardy."

Benchmark your financial performance

Henao recommends that entrepreneurs  benchmark the financial performance of their business against that of similar companies in the same industry. Results that are below the average may highlight areas for improvement.

For instance, a subpar gross profit margin might indicate faulty pricing based on an inaccurate reading of costs. To solve the situation, you will likely have to reduce costs, increase prices or a combination of the two.

"Entrepreneurs often work on intuition," Henao says. "But having the right information at the right time will help entrepreneurs make more educated decisions."

30 Financial Metrics and KPIs to Measure Success in 2021

Scott Beaver

Financial key performance indicators (KPIs) are select metrics that help managers and financial specialists analyze the business and measure progress toward strategic goals. A wide variety of financial KPIs are used by different businesses to help monitor their success and drive growth. For each company, it’s essential to identify KPIs that are the most meaningful to its business.

The following overview of 30 KPIs is designed to help leaders choose the KPIs that make the most sense for their organizations in the year ahead.

What Are KPIs?

KPIs are metrics that provide insights into the underlying financial and operational strength of a business. They can be based on any kind of data that is important to a company, such as sales per square foot of retail space, click-through rate for web ads or accounts closed per salesperson. Many KPIs are ratios that highlight important relationships in data, such as the ratio of profit to revenue or the ratio of current assets to current liabilities. A single KPI measurement can provide a useful snapshot of the business’s health at a specific point in time.

KPIs are even more powerful when they are used to analyze trends over time, to measure progress against targets or to compare the business with other, similar companies. Their value expands further when businesses consider them alongside other meaningful KPIs to create a more complete view of the business.

What Is a Financial KPI?

Financial KPIs are high-level measures of profits, revenue, expenses or other financial outcomes that specifically focus on relationships derived from accounting data — and they’re almost always tied to a specific financial value or ratio. Most KPIs fall into five broad categories based on the type of information they measure:

Why Are Financial Metrics and KPIs Important to Your Business?

Like the indicators and warning lights displayed on a vehicle’s dashboard, financial KPIs enable business leaders to focus on the big picture, helping them steer the company and identify any pressing issues without getting mired in the details of what goes on under the hood. These snippets of information can show when operations are running smoothly and when there are significant changes or warning signs. KPIs can also be used to help manage the company to achieve specific goals.

Which KPIs Are Best?

For any business, the best KPIs help companies determine what they're doing well and where they need to improve. While the actual metrics will vary from company to company, automated KPIs are the best way to track performance. After selecting a set of KPIs that matches your business priorities, you can generally automate their calculation and have them updated in real time by integrating the company’s accounting and ERP systems. This ensures the KPIs reflect the current state of the business and are always calculated the same way.

Automating KPIs is important for companies of all sizes. It means small businesses can direct more of their resources to analyzing KPIs instead of expending effort — and money — to create them. Larger enterprises can also better manage voluminous data this way than by using error-prone spreadsheets, and they can achieve better consistency across business units.

Defining the Right KPIs for Your Business

Determining the most useful and meaningful KPIs for your business can be challenging. The KPIs you choose will depend on your company’s goals, business model and specific operating processes. Some KPIs are almost universally applicable, such as accounts receivable turnover and the quick ratio. Other KPIs differ by industry. For example, manufacturers must monitor the status of their inventory, while services businesses might focus on measuring revenue per employee when evaluating efficiency.

Measuring and constantly monitoring KPIs are best practices for running a successful business. The list below describes 30 of the most commonly used financial metrics and KPIs , and you can find formulas and more information on each below.

Gross Profit Margin: This is an intermediate — but critical — measure of the profitability and efficiency of the company’s core business. It’s calculated as gross profit divided by net sales, and is usually expressed as a percentage. Gross profit is net sales minus cost of goods sold (COGS) , which is the direct cost of producing the items sold. Calculating profit as a percentage of revenue makes it easier to analyze profitability trends over time and to compare profitability with other companies. The formula for calculating gross profit margin is:

Gross profit margin = (Net sales – COGS) / Net sales x 100%

Return on Sales (ROS)/Operating Margin: This metric looks at how much operating profit the company generates from each dollar of sales revenue. It is calculated as operating income, or earnings before interest and taxes (EBIT), divided by net sales revenue. Operating income is the profit a company makes on sales revenue after deducting COGS and operating expenses . ROS is commonly used as a measure of how efficiently the company turns revenue into profit. The formula for return on sales is:

Return on sales = (Earnings before interest and taxes / Net sales) x 100%

Net Profit Margin: This is a comprehensive measure of how much profit a company makes after accounting for all expenses. It’s calculated as net income divided by revenue. Net income is often regarded as the ultimate metric of profitability — the “bottom line” — because it’s the profit remaining after deducting all operating and non-operating costs, including taxes. Net profit margin is usually expressed as a percentage. The formula for net profit margin is:

Net profit margin = (Net income / Revenue) x 100%

Operating Cash Flow Ratio (OCF): This liquidity KPI ratio measures a company’s ability to pay for short-term liabilities with cash generated from its core operations. It’s calculated by dividing operating cash flow by current liabilities. OCF is the cash generated by a company’s operating activities, while current liabilities include accounts payable and other debts that are due within a year. OCF uses information from a company’s statement of cash flows, rather than the income statement or balance sheet, which removes the impact of non-cash operating expenses. The formula for operating cash flow is:

Operating cash flow ratio = Operating cash flow / Current liabilities

Current Ratio: This shows a company’s short-term liquidity. It’s the ratio of the company’s current assets to its current liabilities. Current assets are those that can be converted into cash within a year, including cash, accounts receivable and inventory. Current liabilities include all liabilities due within a year, including accounts payable. Generally, a current ratio below one may be a warning sign that the company doesn’t have enough convertible assets to meet its short-term liabilities. The current ratio formula is:

Current ratio = Current assets / Current liabilities

Working Capital: This liquidity measure is often used in conjunction with other liquidity metrics, such as the current ratio. Like the current ratio, it compares the company’s current assets with its current liabilities. However, it expresses the result in dollars instead of as a ratio. Low working capital may indicate that the company will have difficulty meeting its financial obligations. Conversely, a very high amount may be a sign that it’s not using its assets optimally. The formula for working capital is:

Working capital = Current assets – Current liabilities

Quick Ratio/Acid Test: The quick ratio is a liquidity risk KPI that measures the ability of a company to meet its short-term obligations by converting quick assets into cash. Quick assets are those current assets that can be converted into cash without discounting or writing down the value. In other words, quick assets are current assets – inventory. The quick ratio is also known as the acid test ratio because it’s used to measure the financial strength of a business. It reflects the organization’s ability to generate cash quickly to cover its debts if it experiences cash flow problems. Companies often aim for a quick ratio that’s greater than one. The quick ratio formula is:

Quick ratio = Quick assets / Current liabilities

Gross Burn Rate: Generally used as a KPI by loss-generating startups, burn rate measures the rate at which the company uses up its available cash to cover operating expenses. The higher the burn rate, the faster the company will run out of cash unless it can attract more funding or receives additional financing. Investors often examine a company’s gross burn rate when considering whether to provide funding. The gross burn rate formula is:

Gross burn rate = Company cash / Monthly operating expenses

Current Accounts Receivable (AR) Ratio: This metric reflects the extent to which the company’s customers pay invoices on time. It’s calculated as the total value of sales that are unpaid but still within the company’s billing terms in relation to the total balance of all AR. A higher ratio is generally better because it reflects fewer past-due invoices. A low ratio shows the company is having difficulty collecting money from customers and can be an indicator of potential future cash flow problems. The current AR formula is:

Current accounts receivable = (Total accounts receivable – Past due accounts receivable) / Total accounts receivable

Current Accounts Payable (AP) Ratio: This is a measure of whether the company pays its bills on time. It’s the total value of supplier payments that are not yet due divided by the total balance of all AP. A higher ratio indicates that the company is paying more of its bills on time. Spreading out payments to suppliers may ease a company’s cash flow problems, but it can also mean that suppliers are less likely to extend favorable credit terms in the future. The formula for current AP is:

Current accounts payable = (Total accounts payable – Past due accounts receivable) / Total accounts receivable

Accounts Payable (AP) Turnover: This is a liquidity measure that shows how fast a company pays its suppliers. It looks at how many times a company pays off its average AP balance in a period, typically a year. It’s a key indicator of how a company manages its cash flow. A higher ratio indicates that a company pays its bills faster. The formula for AP turnover is:

Accounts payable turnover = Net Credit Purchases / Average accounts payable balance for period

Average Invoice Processing Cost: Average invoice processing cost is an efficiency metric that estimates the average cost of paying each bill owed to suppliers. Processing costs often include labor, bank charges, systems, overhead and mailing costs. Factors such as outsourcing and the level of AP automation can influence the overall processing cost. A lower cost indicates a more efficient AP process. The formula for AP process cost is:

Average invoice processing cost = Total accounts payable processing costs / Number of invoices processed for period

Days Payable Outstanding (DPO): This is another way to calculate the speed at which a company pays for purchases obtained on vendor credit terms. This KPI converts AP turnover into a number of days. A lower value means the company is paying faster. The formula for calculating days payable outstanding is:

Days payable outstanding = (Accounts payable x 365 days) / COGS

Accounts Receivable (AR) Turnover: This measures how effectively the company collects money from customers on time. It reflects the number of times the average AR balance is converted to cash during a period, typically a year. It’s a ratio calculated by dividing net sales by the average AR balance during the period. A higher AR turnover is generally desirable. The formula for AR turnover is:

Accounts receivable turnover = Sales on account / Average accounts receivable balance for period

Days Sales Outstanding (DSO): This is another metric that companies use to measure how quickly its customers pay their bills. It is the average number of days required to collect accounts receivable payments. DSO converts the accounts receivable turnover metric into an average time in days. A lower value means your customers are paying faster. The formula for days sales outstanding is:

Days sales outstanding = 365 days / Accounts receivable turnover

Inventory Turnover: This operational efficiency metric shows the number of times the average balance of inventory was sold during a period, typically a year. In general, a low inventory turnover ratio can indicate that the company is buying too much inventory or that sales are weak; a higher ratio indicates less inventory or stronger sales. An extremely high ratio could indicate that the company doesn’t have enough inventory to meet demand, limiting sales. The formula for inventory turnover is:

Inventory turnover = COGS / Average inventory balance for period

Days Inventory Outstanding (DIO): This inventory management KPI provides another way to determine how quickly the company sells its inventory. It measures the average number of days required to sell an item in inventory. DIO converts the inventory turnover metric into a number of days. The formula for DIO is:

Days inventory outstanding = 365 days / Inventory turnover

Cash Conversion Cycle: This calculates how long it takes a company to convert a dollar invested in inventory into cash received from customers. It takes into account both the time it takes to sell inventory and the time it takes to collect payment from customers. It’s expressed as a number of days. The formula for operating cycle is:

Operating cycle = Days inventory outstanding + Days sales outstanding

Budget Variance: This compares the company’s actual performance to budgets or forecasts. Budget variance can analyze any financial metric, such as revenue, profitability or expenses. The variance can be stated in dollars or, more often, as a percentage of the budgeted amount. Budget variances can be favorable or unfavorable, with unfavorable budget variances typically shown in parentheses. A positive budget variance value is considered favorable for revenue and income accounts, but it can be unfavorable for expenses. The formula for calculating budget variance is:

Budget variance = (Actual result – Budgeted amount) / Budgeted amount x 100

Payroll Headcount Ratio: This KPI is a measure of the productivity and efficiency of the HR team. It shows how many full-time employees are supported by each payroll or HR specialist. The calculation is usually based on full-time equivalent (FTE) headcounts. The formula for payroll headcount ratio is:

Payroll headcount ratio = HR headcount / Total company headcount

Sales Growth Rate: One of the most critical revenue KPIs for many companies, sales growth shows the change in net sales from one period to another, expressed as a percentage. Companies often compare sales to the corresponding period during the previous year, or quarter-to-quarter changes in sales during the current year. A positive value indicates sales growth; negative values mean sales are contracting. The formula for sales growth rate is:

Sales growth rate = (Current net sales – Prior period net sales) / Prior period net sales x 100

Fixed Asset Turnover Ratio: This shows a company’s ability to generate sales from its investment in fixed assets. This KPI is especially relevant to companies that make significant investments in property, plant and equipment (PPE) in order to increase output and sales. A higher ratio indicates that the company is using those fixed assets more effectively. The average fixed asset balance is calculated by dividing total sales by net of accumulated depreciation. The formula for fixed asset turnover is:

Fixed asset turnover = Total sales / Average fixed assets

Return on Assets (ROA): This efficiency metric shows how well an operations management team uses its assets to generate profit. It takes into account all assets, including current assets such as accounts receivable and inventory, as well as fixed assets, such as equipment and real estate. ROA excludes interest expense, as financing decisions are typically not within operating managers’ control. The formula for return on assets is:

Return on assets = Net income / Total assets for period

Selling, General and Administrative (SG&A) Ratio: This efficiency metric indicates what percentage of sales revenue is used to cover SG&A expenses . These expenses can include a broad range of operational costs, including rent, advertising and marketing, office supplies and salaries of administrative staff. Generally, the lower the SG&A ratio, the better. The formula for SG&A ratio is:

SGA = (Selling + General + Administrative expense) / Net sales revenue

Interest Coverage: A long-term solvency KPI, interest coverage quantifies a company’s ability to meet contractual interest payments on debt such as loans or bonds. It measures the ratio of operating profit to interest expense; a higher ratio suggests that the company will be able to service debt more easily. The formula for interest coverage is:

Interest coverage = EBIT / Interest expense

Earnings Per Share (EPS): This profitability metric estimates how much net income a public company generates per share of its stock. It’s typically measured by the quarter and by the year. Analysts, investors and potential acquirers often use EPS as a key measure of a company’s profitability and also as a way to calculate its total value. EPS can be calculated several ways, but here’s a widely used basic formula:

Earnings per share = Net income / Weighted average number of shares outstanding

Weighted average is basically the average number of shares outstanding — or available — during a given reporting period. The total number of shares can change due to stock splits, stock repurchase, etc. If EPS were based on the total share outstanding at the end of the reporting period, companies could manipulate results by repurchasing stock at the end of a quarter.

Debt-to-Equity Ratio: This ratio looks at a company’s borrowing and the level of leverage. It compares the company’s debt with the total value of shareholder’s equity. The calculation includes both short-term and long-term debt. A high ratio indicates that the company is highly leveraged. This may not be a problem if the company can use the money it borrowed to generate a healthy profit and cash flow. The formula for debt-equity ratio is:

Debt-to-equity ratio = Total liabilities / Total shareholders’ equity

Budget Creation Cycle Time: This efficiency metric measures how long it takes to complete the organization’s annual or periodic budgeting process. It’s usually measured from the time of establishing budget objectives to creating an approved, ready-to-use budget. This metric is usually calculated as the total number of days.

Budget creation cycle time = Date budget finalized – Date budgeting activities started

Line Items in Budget: The number of line items in a budget or forecast is an indicator of the level of detail in the budget. A company can prepare its current budget by adjusting each line item in a previous budget to reflect current expectations. Budgets are often prepared at the account level or by project. They may include line items that correspond to lines in the company’s financial statements.

Number of Budget Iterations: This is a measure of the accuracy and efficiency of the company’s budgeting process. It is the number of times a budget is reworked during the budget creation cycle. A highly manual process can be more error-prone, leading to a greater number of iterations before the company arrives at an accurate budget. Other reasons for an increased number of iterations include extensive internal negotiations, changes in business strategy or changes in the macro-economic climate. A high number of budget iterations can lead to delays and an increased budget cycle time, which can hinder the company’s ability to start executing toward the goals defined in the budget.

Number of budget iterations = Total amount of budget versions created

Measuring and Monitoring KPIs With Financial Management Software

Beyond the common financial metrics and KPIs listed above, businesses may want to track specialized KPIs that focus on their inner workings or functions, such as those related to analyzing inventory , sales, receivables, payables and human resources. Manually mapping and calculating financial KPI formulas from general ledger accounts can be a cumbersome, error-prone and time-consuming process. That’s why many businesses use software to automate these calculations and create dashboards with all these key numbers in one place.

NetSuite’s robust accounting and financial management software includes built-in real-time dashboards and KPIs tailored to different roles and functions within the organization as well as by industry. Users can easily add customized KPIs to support specific requirements or goals. All information is automatically updated as the platform processes transactions and other financial data.

Financial KPIs and metrics help business leaders, managers and staff quickly get the pulse of how their company is performing and track any important changes over time. They also help leaders develop key objectives and keep their employees focused on measurable goals. Financial software that provides automated, accurate, real-time KPIs keeps the company moving toward those goals, rather than getting lost in mounds of data and reports.

#1 Cloud Accounting Software

Financial KPI FAQs

What are financial KPIs?

Financial KPIs are metrics tied directly to financial values that a company uses to monitor and analyze key aspects of its business. Many KPIs are ratios that measure meaningful relationships in the company’s financial data, such as the ratio of profit to revenue. KPIs can be used as indicators of a company’s financial health at any point in time. They are also widely used to track trends and analyze progress toward strategic goals.

What are examples of KPIs?

Companies use many different financial KPIs. The KPIs a company chooses depends on its goals, industry, business model and other factors. Common KPIs include profitability measures, such as gross and net profit, and liquidity measures, such as current and quick ratios.

What are the five types of performance indicators?

The five primary types of performance indicators are profitability, leverage, valuation, liquidity and efficiency KPIs. Examples of profitability KPIs include gross and net margin and earnings per share (EPS). Efficiency KPIs include the payroll headcount ratio. Examples of liquidity KPIs are current and quick ratios. Leverage KPIs include the debt-to-equity ratio.

What are the five key performance indicators?

Each company may choose different KPIs, depending on its goals and operational processes. Some KPIs are used by a wide variety of companies in different industries, like operating and net profit margin, sales growth and accounts receivable turnover. Companies may also choose KPIs that are specific to their industry. For example, manufacturers may track KPIs that measure how quickly and efficiently they convert their investment in fixed assets and inventory into cash, such as fixed asset turnover and inventory turnover.

accounts payable kpis

Top Accounts Payable (AP) KPIs to Track

It’s pretty well established that finance leaders are continually striving to use data more effectively, with an imperative to produce better reporting on key performance indicators (KPIs) and identify areas to realize cost…

More On This

accounting challenges

Trending Articles

general ledger

Learn How NetSuite Can Streamline Your Business

NetSuite has packaged the experience gained from tens of thousands of worldwide deployments over two decades into a set of leading practices that pave a clear path to success and are proven to deliver rapid business value. With NetSuite, you go live in a predictable timeframe — smart, stepped implementations begin with sales and span the entire customer lifecycle, so there’s continuity from sales to services to support.

How is your business adapting to change?

Before you go...

Discover the products that 33,000+ customers depend on to fuel their growth.



12 Key Financial Performance Indicators You Should Be Tracking

Topics: Small Business Advice and Tips , outsourced accounting services , business strategy , key performance indicators , KPIs , professional services


Your business's Key Performance Indicators (KPIs) are your tools for measuring and tracking progress in essential areas of company performance. Your KPIs provide you with a general picture of the overall health of your business. Acquiring insights afforded by your KPIs allows you to be proactive in making necessary changes in under-performing areas, preventing potentially serious losses. The KPI quantification then allows you to measure the effectiveness of your efforts. This process ensures the long-term sustainability of your company's operating model, and helps increase your business's value as an investment.

The first priority is to identify and understand the overall impact that the various financial realities represented by your KPI numbers have on your business. Then, use the insights you acquire from these invaluable financial management performance indicators to identify and implement changes that correct problems with policies, processes, personnel, or products that are impacting one or more of your KPI values.

Primary KPIs that you're undoubtedly already using include revenue, expense, gross profit, and net profit. Here are other key indicators that should be tracked, analyzed, and acted upon as needed.

1. Operating Cash Flow

Monitoring and analyzing your Operating Cash Flow is an essential for understanding your ability to pay for deliveries and routine operating expenses. This KPI is also used in comparison with total capital you have in use—an analysis that reveals whether or not your operations are generating sufficient cash for support of capital investments you are making to advance your business.

The analysis of your ratio of operating cash flow compared to your total capital employed gives you deeper insight into your business's financial health, allowing you to look beyond just profits, when making capital investment decisions.

2. Working Capital

Cash that is immediately available is "working capital". Calculate your Working Capital by subtracting your business's existing liabilities from its existing assets. Cash on hand, accounts receivable, short-term investments are all included, as well as accounts payable, accrued expenses, and loans are all part of this KPI equation.

This especially meaningful KPI informs you of the condition of your business in terms of its available operating funds, by showing the extent to which your available assets can cover your short-term financial liabilities.

3. Current Ratio

While the Working Capital KPI discussed above subtracts liabilities from assets, the Current Ratio KPI divides total assets by liabilities to give you an understanding the solvency of your business—i.e., how well your company is positioned to meet its financial obligations consistently on time and to maintain a level of credit rating that is required to order to grow and expand your business.

4. Debt to Equity Ratio

Debt to Equity is a ratio calculated by looking at your business's total liabilities in contrast to your shareholders' equity (net worth). This KPI indicates how well your business is funding its growth and how well you are utilizing your shareholders' investments. The number indicates how profitable the business is. It tells you and your shareholders how much debt the business has accrued in effort to become profitable. A high debt-to-equity ratio reveals a practice of paying for growth by accumulating debt. This critical KPI helps you focus on your financial accountability.

5. LOB Revenue Vs. Target

This KPI compares your revenue for a line of business to your projected revenue for it. Tracking and analyzing discrepancies between the actual revenues and your projections helps you understand how well a particular department is performing financially. This is one of the two primary factors in the calculation of the Budget Variance KPI—the comparison between projected and actual operating budget totals, which is necessary in order for you to budget more accurately for needs.

6. LOB Expenses Vs. Budget

Comparing actual expenses to the budgeted amount produces this KPI. The comparison helps you understand where and how some budgeted spending went off track, so that you can budget more effectively going forward. Expenses vs. Budget is the other primary factor of the Budget Variance KPI. Knowing the amount of variance between the total assumed and total actual ratio of revenues to expenses helps you become an expert on the relationship between your business's operations and finances.

7. Accounts Payable Turnover

The Accounts Payable Turnover KPI shows the rate at which your business pays off suppliers. The ratio is the result of dividing the total costs of sales during a period (the costs your company incurred while supplying its goods or services), by your average accounts payable for that period.

This is a very informative ratio when compared over multiple periods. A declining accounts payable turnover KPI may indicate that the length of time your company is taking to pay off its suppliers is increasing and that action is required in order to keep your good standing with your vendors, and to enable your business to take advantage of significant time-driven discounts from vendors.

8. Accounts Receivable Turnover

The accounts receivable turnover KPI reflects the rate at which your business is successfully collecting payments due from your customers. This KPI is calculated by dividing your total sales for a period by your average accounts receivable for that period. This number can serve as an alert that corrections need to be made in managing receivables, in order to bring payment collections within appropriate timeframes.

9. Inventory Turnover

Inventory continuously flows in and out of your production and warehousing facilities. It can be hard to visualize the amount of turnover that is actually taking place. The inventory turnover KPI allows you to know how much of your average inventory your company has sold in a period. This KPI is calculated by dividing sales within a given period by your average inventory in the same period. The KPI gives you a picture of your company's sales strength and production efficiency.

10. Return on Equity

The Return on Equity (ROE) KPI measures your company's net income in contrast to each unit of shareholder equity (net worth). By comparing your company's net income to its overall wealth, your ROE indicates whether or not your net income is appropriate for your company's size.

Regardless of how much your company is currently worth (its net worth), your current net income will determine its probable worth in the future. Therefore, your business's ROE ratio both informs you of the amount of your organization’s profitability and quantifies its general operational and financial management efficiency. An improving, or high ROE clearly indicates to your shareholders that their investments are being optimized to grow the business.

11. Quick Ratio

Your Quick Ratio KPI measures your organization's ability to utilize its highly liquid assets to immediately meet your business's short-term financial responsibilities. This is the measurement of your company’s wealth and financial flexibility. It is understood as a more conservative evaluation of a business's fiscal health than the Current Ratio, because calculation of the Quick Ratio excludes inventories from assets.

This Quick Ratio KPI has the popular nickname of "Acid Test" (after the nitric acid test used in detecting gold). Similarly, the Quick Ratio  is a quick and easy way of assessing the wealth and health of your company. If you’ are a new adopter of KPIs, the Quick Ratio KPI is a good approach to getting a quick view of your business’s overall health.

12. Customer Satisfaction

While budget-linked KPIs are important, the ultimate indicator of a company's potential for long-term success is in its Customer Satisfaction quantification. The Net Promoter Score (NPS) is the result of calculating the various levels of positive response that customers provide on very brief customer satisfaction surveys. The NPS a simple and accurate measurement of likely rates of customer retention (future sales to current customers) across your revenue base, and of potential for generating referral business to grow that base.

Additional Key Indicators

Certain other KPIs should be tracked in specific operational areas of finance, marketing, production, purchasing, customer services, and others. For examples:

KPI failures can occur due to any one of a number of reasons:

Get to Know Our Implementation Team

Are You Guilty of the 7 Deasly Sins of Bookkeeping?

exit strategy alignment

Subscribe to Email Updates

10 Signs Your Business Is Ready For Outsourced Accounting Services


financial indicators in business plan

Business Insights

Harvard Business School Online's Business Insights Blog provides the career insights you need to achieve your goals and gain confidence in your business skills.

13 Financial Performance Measures Managers Should Monitor

Business managers reviewing financial performance documents

While you may not have a background in finance, a basic understanding of the key concepts of financial accounting can help you improve your decision-making process , as well as your chances for career success. With a better understanding of how your organization measures financial performance, you can take steps to provide additional value in your daily activities.

Finance can be intimidating for the uninitiated. To help you become more comfortable understanding and speaking about financial topics, here’s a list of the top financial metrics managers need to understand.

What Are Financial KPIs?

Financial KPIs (key performance indicators) are metrics organizations use to track, measure, and analyze the financial health of the company. These financial KPIs fall under a variety of categories, including profitability, liquidity, solvency, efficiency, and valuation.

By understanding these metrics, you can be better positioned to know how the business is performing from a financial perspective. You can then use this knowledge to adjust the goals of your department or team and contribute to critical strategic objectives.

For managers, these metrics and KPIs should be made available internally and distributed on a weekly or monthly basis in the form of email updates, dashboards, or reports. If they’re not readily distributed, you can still become familiar with the metrics via financial statement analysis.

Access your free e-book today.

What Is Financial Statement Analysis?

Financial statement analysis is the process of reviewing key financial documents to gain a better understanding of how the company is performing. While there are many different types of financial statements that can be analyzed as part of this process, some of the most important, especially to managers, include the:

13 Financial Performance Measures to Monitor

The metrics below are typically found in the financial statements listed above and among the most important for managers and other key stakeholders within an organization to understand.

1. Gross Profit Margin

Gross profit margin is a profitability ratio that measures what percentage of revenue is left after subtracting the cost of goods sold. The cost of goods sold refers to the direct cost of production and does not include operating expenses, interest, or taxes. In other words, gross profit margin is a measure of profitability, specifically for a product or item line, without accounting for overheads.

Gross Profit Margin = (Revenue - Cost of Sales) / Revenue * 100

gross profit margin equation: gross profit margin equals revenue minus cost of sales divided by revenue times 100

2. Net Profit Margin

Net profit margin is a profitability ratio that measures what percentage of revenue and other income is left after subtracting all costs for the business, including costs of goods sold, operating expenses, interest, and taxes. Net profit margin differs from gross profit margin as a measure of profitability for the business in general, taking into account not only the cost of goods sold, but all other related expenses.

Net Profit Margin = Net Profit / Revenue * 100

net profit margin equation: net profit margin equals net profit divided by revenue times 100

3. Working Capital

Working capital is a measure of the business’s available operating liquidity, which can be used to fund day-to-day operations.

Working Capital = Current Assets - Current Liabilities

working capital equation: working capital equals current assets minus current liabilities

4. Current Ratio

Current ratio is a liquidity ratio that helps you understand whether the business can pay its short-term obligations—that is, obligations due within one year— with its current assets and liabilities.

Current Ratio = Current Assets / Current Liabilities

current ratio equation: current ratio equals current assets divided by current liabilities

5. Quick Ratio

The quick ratio , also known as an acid test ratio , is another type of liquidity ratio that measures a business’s ability to handle short-term obligations. The quick ratio uses only highly liquid current assets, such as cash, marketable securities, and accounts receivables, in its numerator. The assumption is that certain current assets, like inventory, are not necessarily easy to turn into cash.

Quick Ratio = (Current Assets - Inventory) / Current Liabilities

quick ratio equation: quick ratio equals current assets minus inventory divided by current liabilities

6. Leverage

Financial leverage , also known as the equity multiplier , refers to the use of debt to buy assets. If all the assets are financed by equity, the multiplier is one. As debt increases, the multiplier increases from one, demonstrating the leverage impact of the debt and, ultimately, increasing the risk of the business.

Leverage = Total Assets / Total Equity

leverage equation: leverage equals total assets divided by total equity

7. Debt-to-Equity Ratio

The debt-to-equity ratio is a solvency ratio that measures how much a company finances itself using equity versus debt. This ratio provides insight into the solvency of the business by reflecting the ability of shareholder equity to cover all debt in the event of a business downturn.

Debt to Equity Ratio = Total Debt / Total Equity

debt-to-equity equation: debt-to-equity equals total debt divided by total equity

8. Inventory Turnover

Inventory turnover is an efficiency ratio that measures how many times per accounting period the company sold its entire inventory. It gives insight into whether a company has excessive inventory relative to its sales levels.

Inventory Turnover = Cost of Sales / (Beginning Inventory + Ending Inventory / 2)

inventory turnover equation: inventory turnover equals cost of sales divided by (beginning inventory plus ending inventory divided by 2)

9. Total Asset Turnover

Total asset turnover is an efficiency ratio that measures how efficiently a company uses its assets to generate revenue. The higher the turnover ratio, the better the performance of the company.

Total Asset Turnover = Revenue / (Beginning Total Assets + Ending Total Assets / 2)

total asset turnover equation: total asset turnover equals revenue divided by (beginning total assets plus ending total assets divided by 2)

10. Return on Equity

Return on equity, more commonly displayed as ROE, is a profitability ratio measured by dividing net profit over shareholders’ equity. It indicates how well the business can utilize equity investments to earn profit for investors.

ROE = Net Profit / (Beginning Equity + Ending Equity) / 2

return on equity equation: return on equity equals net profit divided by (beginning equity plus ending equity_ divided by 2

11. Return on Assets

Return on assets, or ROA, is another profitability ratio, similar to ROE, which is measured by dividing net profit by the company’s average assets. It’s an indicator of how well the company is managing its available resources and assets to net higher profits.

ROA = Net Profit / (Beginning Total Assets + Ending Total Assets) / 2

return on assets equation: return on assets equals net profit divided by (beginning total assets plus ending total assets) divided by 2

12. Operating Cash Flow

Operating cash flow is a measure of how much cash the business has as a result of its operations. This measure could be positive, meaning cash is available to grow operations, or negative, meaning additional financing would be required to maintain current operations. The operating cash flow is usually found on the cash flow statement and can be calculated using one of two methods: direct or indirect .

13. Seasonality

Seasonality is a measure of how the period of the year is affecting your company’s financial numbers and outcomes. If you’re in an industry that’s affected by high and low seasons, this measure will help you sort out confounding variables and see the numbers for what they truly are.

It’s important to note there’s no absolute good or bad when it comes to financial KPIs. Metrics need to be compared to prior years or competitors in the industry to see whether your company’s financial performance is improving or declining and how it’s performing relative to others.

Which HBS Online Finance & Accounting Course Is Right for You? | Download Your Free Flowchart

The Bottom Line

There are many other financial KPIs you can track and monitor to understand how your company is doing and how your actions impact progress toward shared goals. The financial KPIs listed above are a great place to start if you’re unfamiliar with finance. Understanding how these metrics influence business strategy is a critical financial accounting skill for all managers to develop.

Are you looking to develop or hone your finance skills? Explore our online finance and accounting courses to develop your toolkit for making and understanding financial decisions. If you aren't sure which course is the right fit, download our free course flowchart to determine which best aligns with your goals.

financial indicators in business plan

About the Author

Free Financial Templates for a Business Plan

Smartsheet Contributor Andy Marker

July 29, 2020

In this article, we’ve rounded up expert-tested financial templates for your business plan, all of which are free to download in Excel, Google Sheets, and PDF formats.

Included on this page, you’ll find the essential financial statement templates, including income statement templates , cash flow statement templates , and balance sheet templates . Plus, we cover the key elements of the financial section of a business plan .

Financial Plan Templates

Download and prepare these financial plan templates to include in your business plan. Use historical data and future projections to produce an overview of the financial health of your organization to support your business plan and gain buy-in from stakeholders

Business Financial Plan Template

Business Financial Plan Template

Use this financial plan template to organize and prepare the financial section of your business plan. This customizable template has room to provide a financial overview, any important assumptions, key financial indicators and ratios, a break-even analysis, and pro forma financial statements to share key financial data with potential investors.

Download Financial Plan Template

Word | PDF | Smartsheet

Financial Plan Projections Template for Startups

Startup Financial Projections Template

This financial plan projections template comes as a set of pro forma templates designed to help startups. The template set includes a 12-month profit and loss statement, a balance sheet, and a cash flow statement for you to detail the current and projected financial position of a business.

‌ Download Startup Financial Projections Template

Excel | Smartsheet

Income Statement Templates for Business Plan

Also called profit and loss statements , these income statement templates will empower you to make critical business decisions by providing insight into your company, as well as illustrating the projected profitability associated with business activities. The numbers prepared in your income statement directly influence the cash flow and balance sheet forecasts.

Pro Forma Income Statement/Profit and Loss Sample

financial indicators in business plan

Use this pro forma income statement template to project income and expenses over a three-year time period. Pro forma income statements consider historical or market analysis data to calculate the estimated sales, cost of sales, profits, and more.

‌ Download Pro Forma Income Statement Sample - Excel

Small Business Profit and Loss Statement

Small Business Profit and Loss Template

Small businesses can use this simple profit and loss statement template to project income and expenses for a specific time period. Enter expected income, cost of goods sold, and business expenses, and the built-in formulas will automatically calculate the net income.

‌ Download Small Business Profit and Loss Template - Excel

3-Year Income Statement Template

3 Year Income Statement Template

Use this income statement template to calculate and assess the profit and loss generated by your business over three years. This template provides room to enter revenue and expenses associated with operating your business and allows you to track performance over time.

Download 3-Year Income Statement Template

For additional resources, including how to use profit and loss statements, visit “ Download Free Profit and Loss Templates .”

Cash Flow Statement Templates for Business Plan

Use these free cash flow statement templates to convey how efficiently your company manages the inflow and outflow of money. Use a cash flow statement to analyze the availability of liquid assets and your company’s ability to grow and sustain itself long term.

Simple Cash Flow Template

financial indicators in business plan

Use this basic cash flow template to compare your business cash flows against different time periods. Enter the beginning balance of cash on hand, and then detail itemized cash receipts, payments, costs of goods sold, and expenses. Once you enter those values, the built-in formulas will calculate total cash payments, net cash change, and the month ending cash position.

Download Simple Cash Flow Template

12-Month Cash Flow Forecast Template

financial indicators in business plan

Use this cash flow forecast template, also called a pro forma cash flow template, to track and compare expected and actual cash flow outcomes on a monthly and yearly basis. Enter the cash on hand at the beginning of each month, and then add the cash receipts (from customers, issuance of stock, and other operations). Finally, add the cash paid out (purchases made, wage expenses, and other cash outflow). Once you enter those values, the built-in formulas will calculate your cash position for each month with.

‌ Download 12-Month Cash Flow Forecast

3-Year Cash Flow Statement Template Set

3 Year Cash Flow Statement Template

Use this cash flow statement template set to analyze the amount of cash your company has compared to its expenses and liabilities. This template set contains a tab to create a monthly cash flow statement, a yearly cash flow statement, and a three-year cash flow statement to track cash flow for the operating, investing, and financing activities of your business.

Download 3-Year Cash Flow Statement Template

For additional information on managing your cash flow, including how to create a cash flow forecast, visit “ Free Cash Flow Statement Templates .”

Balance Sheet Templates for a Business Plan

Use these free balance sheet templates to convey the financial position of your business during a specific time period to potential investors and stakeholders.

Small Business Pro Forma Balance Sheet

financial indicators in business plan

Small businesses can use this pro forma balance sheet template to project account balances for assets, liabilities, and equity for a designated period. Established businesses can use this template (and its built-in formulas) to calculate key financial ratios, including working capital.

Download Pro Forma Balance Sheet Template

Monthly and Quarterly Balance Sheet Template

financial indicators in business plan

Use this balance sheet template to evaluate your company’s financial health on a monthly, quarterly, and annual basis. You can also use this template to project your financial position for a specified time in the future. Once you complete the balance sheet, you can compare and analyze your assets, liabilities, and equity on a quarter-over-quarter or year-over-year basis.

Download Monthly/Quarterly Balance Sheet Template - Excel

Yearly Balance Sheet Template

financial indicators in business plan

Use this balance sheet template to compare your company’s short and long-term assets, liabilities, and equity year-over-year. This template also provides calculations for common financial ratios with built-in formulas, so you can use it to evaluate account balances annually.

Download Yearly Balance Sheet Template - Excel

For more downloadable resources for a wide range of organizations, visit “ Free Balance Sheet Templates .”

Sales Forecast Templates for Business Plan

Sales projections are a fundamental part of a business plan, and should support all other components of your plan, including your market analysis, product offerings, and marketing plan . Use these sales forecast templates to estimate future sales, and ensure the numbers align with the sales numbers provided in your income statement.

Basic Sales Forecast Sample Template

Basic Sales Forecast Template

Use this basic forecast template to project the sales of a specific product. Gather historical and industry sales data to generate monthly and yearly estimates of the number of units sold and the price per unit. Then, the pre-built formulas will calculate percentages automatically. You’ll also find details about which months provide the highest sales percentage, and the percentage change in sales month-over-month. 

Download Basic Sales Forecast Sample Template

12-Month Sales Forecast Template for Multiple Products

financial indicators in business plan

Use this sales forecast template to project the future sales of a business across multiple products or services over the course of a year. Enter your estimated monthly sales, and the built-in formulas will calculate annual totals. There is also space to record and track year-over-year sales, so you can pinpoint sales trends.

Download 12-Month Sales Forecasting Template for Multiple Products

3-Year Sales Forecast Template for Multiple Products

3 Year Sales Forecast Template

Use this sales forecast template to estimate the monthly and yearly sales for multiple products over a three-year period. Enter the monthly units sold, unit costs, and unit price. Once you enter those values, built-in formulas will automatically calculate revenue, margin per unit, and gross profit. This template also provides bar charts and line graphs to visually display sales and gross profit year over year.

Download 3-Year Sales Forecast Template - Excel

For a wider selection of resources to project your sales, visit “ Free Sales Forecasting Templates .”

Break-Even Analysis Template for Business Plan

A break-even analysis will help you ascertain the point at which a business, product, or service will become profitable. This analysis uses a calculation to pinpoint the number of service or unit sales you need to make to cover costs and make a profit.

Break-Even Analysis Template

Break Even Analysis

Use this break-even analysis template to calculate the number of sales needed to become profitable. Enter the product's selling price at the top of the template, and then add the fixed and variable costs. Once you enter those values, the built-in formulas will calculate the total variable cost, the contribution margin, and break-even units and sales values.

Download Break-Even Analysis Template

For additional resources, visit, “ Free Financial Planning Templates .”

Business Budget Templates for Business Plan

These business budget templates will help you track costs (e.g., fixed and variable) and expenses (e.g., one-time and recurring) associated with starting and running a business. Having a detailed budget enables you to make sound strategic decisions, and should align with the expense values listed on your income statement.

Startup Budget Template

financial indicators in business plan

Use this startup budget template to track estimated and actual costs and expenses for various business categories, including administrative, marketing, labor, and other office costs. There is also room to provide funding estimates from investors, banks, and other sources to get a detailed view of the resources you need to start and operate your business.

Download Startup Budget Template

Small Business Budget Template

financial indicators in business plan

This business budget template is ideal for small businesses that want to record estimated revenue and expenditures on a monthly and yearly basis. This customizable template comes with a tab to list income, expenses, and a cash flow recording to track cash transactions and balances.

Download Small Business Budget Template

Professional Business Budget Template

financial indicators in business plan

Established organizations will appreciate this customizable business budget template, which  contains a separate tab to track projected business expenses, actual business expenses, variances, and an expense analysis. Once you enter projected and actual expenses, the built-in formulas will automatically calculate expense variances and populate the included visual charts. 

‌ Download Professional Business Budget Template

For additional resources to plan and track your business costs and expenses, visit “ Free Business Budget Templates for Any Company .”

Other Financial Templates for Business Plan

In this section, you’ll find additional financial templates that you may want to include as part of your larger business plan.

Startup Funding Requirements Template

Startup Funding Requirements Template

This simple startup funding requirements template is useful for startups and small businesses that require funding to get business off the ground. The numbers generated in this template should align with those in your financial projections, and should detail the allocation of acquired capital to various startup expenses.

Download Startup Funding Requirements Template - Excel

Personnel Plan Template

Personnel Plan Template

Use this customizable personnel plan template to map out the current and future staff needed to get — and keep — the business running. This information belongs in the personnel section of a business plan, and details the job title, amount of pay, and hiring timeline for each position. This template calculates the monthly and yearly expenses associated with each role using built-in formulas. Additionally, you can add an organizational chart to provide a visual overview of the company’s structure. 

Download Personnel Plan Template - Excel

Elements of the Financial Section of a Business Plan

Whether your organization is a startup, a small business, or an enterprise, the financial plan is the cornerstone of any business plan. The financial section should demonstrate the feasibility and profitability of your idea and should support all other aspects of the business plan. 

Below, you’ll find a quick overview of the components of a solid financial plan.

Need help putting together the rest of your business plan? Check out our free simple business plan templates to get started. You can learn how to write a successful simple business plan  here . 

Visit this  free non-profit business plan template roundup  or download a  fill-in-the-blank business plan template  to make things easy. If you are looking for a business plan template by file type, visit our pages dedicated specifically to  Microsoft Excel ,  Microsoft Word , and  Adobe PDF  business plan templates. Read our articles offering  startup business plan templates  or  free 30-60-90-day business plan templates  to find more tailored options.

Discover a Better Way to Manage Business Plan Financials and Finance Operations

Empower your people to go above and beyond with a flexible platform designed to match the needs of your team — and adapt as those needs change. 

The Smartsheet platform makes it easy to plan, capture, manage, and report on work from anywhere, helping your team be more effective and get more done. Report on key metrics and get real-time visibility into work as it happens with roll-up reports, dashboards, and automated workflows built to keep your team connected and informed. 

When teams have clarity into the work getting done, there’s no telling how much more they can accomplish in the same amount of time.  Try Smartsheet for free, today.

Discover why over 90% of Fortune 100 companies trust Smartsheet to get work done.

Image Alt Text

Eight financial KPIs to help measure your business performance

When running a small business, you can’t rely on your gut instinct all the time, especially when it comes to  financial reporting . You should be objective rather than subjective when determining the financial health of your company.

One way to objectively track the health of your business is through key performance indicators, otherwise known as KPIs. KPIs are metrics that can help you chart progress towards a variety of business goals — from marketing campaigns to supply chain management and finance.

What are financial KPIs?

Financial KPIs measure business performance against specific financial goals such as revenue or profit. They show the financial health of a business against internal benchmarks, competitors, and even other industries. Financial KPIs are widely used in strategic planning and reporting to help people decide where to focus their investment.

Keeping close tabs on your small business’s financial performance is essential to long-term success. Below, you’ll find eight important financial KPIs that will help you measure your business’s financial health and boost your growth rate.

What are the key metrics to focus on?

1. gross profit margin.

Your  gross profit margin  shows how much of your revenue is profit after factoring in expenses like the total cost of production. Shown as a percentage, the formula to calculate gross profit margin is as follows: (revenue – cost of goods sold) ÷ revenue = gross profit margin.

KPIs for small business: gross profit margin

The 5 Most Important Financial KPIs That Drive Business Strategy

Defining a strategy for your business is important—but so is measuring its success. That’s where financial metrics come in.

man woman seated on floor and sofa at home in living room looking at laptop

Part of running (and growing) a successful business is establishing the right business strategy. And part of crafting the right strategy for your business is knowing which key performance indicators (KPIs) you should use to inform that strategy—particularly when it comes to your finances.

A financial KPI can inform your business in many ways. For example, maybe you’re just getting things off the ground and rolling out your first strategic initiatives. You’ll need to measure the impact those initiatives have on your bottom line.

Maybe you’re getting ready to take your business to the next level. You’ll need financial data to help inform your plans to grow and scale. Or, let’s say you’ve had a strategy for your business in place for some time—but you’re not sure if it’s helping you achieve your goals. Digging into the numbers will help you determine whether to keep things moving forward as-is or if your strategy needs an upgrade.

First, Define Your Business Strategy

A business strategy is a clear, measurable plan that outlines, in detail, how to take your business from where you are now to where you want to go. You can lean on your strategy to achieve your business goals (for example, launching a new product or expanding your business to a new market), but it isn’t the same as a business goal.

If the goal is the destination, think of the strategy as the map to get there. When building a strategy, you’ll need to do the groundwork to:

Once you can articulate your business goals and objectives, you’re ready to talk about how you’ll get there: the strategy. And what actions (also known as tactics) you’ll need to take—on a weekly, monthly, or quarterly basis—to get there.

Continuing with the content marketing agency example, that might mean pitching X potential clients each month, setting up an inbound marketing strategy to bring new leads into your business, or publishing thought leadership articles to gain more notoriety.

Related Articles

How to Craft Your 2022 Business Strategy

Long-Term vs. Short-Term Financial KPI Comparison

There are certain KPIs to monitor day-to-day to keep your business on track. These shorter-term KPIs, like operating cash flow , days sales outstanding, or current ratio, will give you key insights into the current financial health of your business. They can help you determine your next best step and how to keep your business moving forward in the immediate future.

But if you want your business to succeed in the long run, you’ll need to look at KPIs that inform long-term strategy. The data you uncover with these KPIs can help you:

Not All KPIs Are (Just) Financial

While financial metrics are important, you’ll also want to look at other KPIs. This includes KPIs that measure your team’s effectiveness (such as staff advocacy score) or customer satisfaction and loyalty (such as net promoter score). These KPIs can give you invaluable insights into your business. And though they’re not technically financial ratios, they can directly impact your revenue. So they’re also helpful from a financial standpoint.

The 5 Most Useful Financial KPIs for Business Strategy

Whatever your business goals, there are some financial key performance indicators you should be continually tracking and using to inform your business strategy. Other metrics beyond these financial KPI examples may also be helpful. But these are fundamental.

For each financial KPI, note the performance indicators that explain how to use the data. This helps you understand a good result versus something that needs improvement and how it could affect your business strategy.

1. Sales Growth Rate

Sales growth is one of the most basic barometers of success for a business. By monitoring the growth of your sales over time, you can identify which elements of your strategy are positively impacting sales and which are falling flat.

The formula to calculate sales growth rate is:

Sales Growth Rate = (Current Net Sales – Previous Net Sales / Previous Net Sales) x 100

Performance Indicators

You always want this KPI to be a positive percentage. That means your overall strategy is working. If your sales growth rate is negative, something about your strategy isn’t connecting with your customers—and it’s time to make a change.

For example, you own a restaurant and introduce one change in Q1: a new menu. If the net sales for your new menu in Q1 were $10,000—but the net sales in Q4, with your old menu, were $15,000—your sales growth rate would be -33.33%, or:

($10,000 – $15,000 / $15,000) x 100

Your new menu isn’t driving the results you’re looking for. Now you can take steps to increase sales—for example, reverting to your old menu or putting more effort and resources into promoting your new menu to customers.

working capital

2. Revenue Concentration

The best use of your time, energy, and resources are often the clients, customers, and projects that drive the most revenue for your business. That’s why revenue concentration is another must-track financial KPI for your business.

Revenue concentration helps you identify how much revenue each client or project produces for your business as a percentage of your total revenue. Using this financial KPI, you can determine the ROI for each client.

Calculating revenue concentration starts by analyzing your revenue streams . (Your FreshBooks Dashboard provides at-a-glance summaries of your income streams, making it easy to analyze them by client or service.)

Once you know how much revenue each client, project, or service is bringing into your business, you can use that data to calculate your revenue concentration. The formula to calculate revenue concentration is:

Revenue Concentration = (Revenue by Customer or Project / Total Revenue) x 100

When you know which customers, clients, or projects are driving the most revenue (and which are not), you can shape your strategy around serving the clients and/or projects that will be the most financially lucrative.

For example, you own a copywriting business, and after analyzing your revenue streams, you realize that 80% of your income comes from white papers, while only 20% comes from other projects like blog posts or website copy.

So white papers are your big money-maker. Now you have data that supports focusing more aggressively on marketing your white paper writing services to potential clients.

Or maybe, after calculating this KPI, you realize that 75% of your revenue is coming from a single client. That’s a risky situation for a business owner. If you lose that client, you also lose most of your income.

In that situation, you could adjust your business strategy to focus on diversifying your client portfolio and spreading your revenue across a wider roster of clients.

3. Net Profit Margin

Profitability is one of the most important indicators of a company’s financial health. If you want your business to succeed in the long run, you need to be generating profit.

While several different profitability ratios can be useful—including gross profit margin and operating profit margin—net profit margin is a must.

Net profit margin measures how much profit your company makes after expenses. That includes operating expenses (like rent and utilities) and non-operating expenses (like taxes and debt payments).

Strategically speaking, the net profit margin gives you the bottom-line view of how profitable you are. If your business isn’t profitable, something needs to change. The formula to calculate net profit margin is:

Net Profit Margin = (Net Income / Revenue) x 100

Simply put, if your net profit margin is positive, you’re generating profit. You can either keep doing what you’re doing or adjust your strategy to increase your profitability.

On the flip side, if your net profit margin is negative, you know your business is losing money. You’ll need to overhaul your business strategy to get your net profit margin in the green. That might include cutting costs, raising prices, acquiring more clients, or finding better clients .

4. Accounts Receivable Turnover

If your customers are dragging their feet and paying their invoices late (or not paying them at all!), it can seriously harm your financial health.

That’s why the accounts receivable turnover (a.k.a. debtor’s ratio) is an important KPI. It measures how well your clients pay their invoices within an allotted timeframe (for example, net 30 or net 60).

The formula for calculating annual accounts receivable turnover is:

Accounts Receivable Turnover = Net Annual Credit Sales ÷ Average Accounts Receivable

The KPI requires you to know your net credit sales, which are any amounts not paid upfront in cash. So, for a project-based business, that would typically be the payment owed for the completed project minus any retainer or fees paid at the start of the project.

It also requires you to calculate your average accounts receivable. That is:

(Beginning Accounts Receivable + Ending Accounts Receivable) ÷ 2

The accounts receivable turnover ratio shows you how many times your accounts receivable turned over in the time period you’re measuring.

By calculating your accounts receivable turnover for a year and dividing 365 days by the number of times per year your AR turns over, you will see how many days on average it takes for you to receive payments.

The higher your accounts receivable turnover, the fewer past-due invoices in your accounts on average, and the better your cash flow. It can also indicate that you have an efficient process for collecting payments from clients.

Lower isn’t always better with this KPI. Maybe your business can do just fine with payments within 15 or 30 days—and giving clients time to pay may contribute to customer retention. So, as long as the average number of days it takes your clients to pay is within that period, all is well.

If your accounts receivable turnover is too low—and customers take too many days to pay—you may start facing cash flow issues. To address the problem, you may need to examine your invoice payment terms , explore different payment methods, or take other actions to get paid faster .

5. Working Capital

As a business owner, you need cash to operate. This cash is called working capital , and it helps you meet your short-term financial obligations that keep your day-to-day operations going.

Understanding your working capital ratio will help you plan your future strategic moves, like hiring new team members to scale your business or investing in new equipment. It will also alert you to when you need funding to keep your business moving forward.

Working capital is calculated by comparing the company’s current assets to its liabilities. The formula for calculating working capital is:

Working Capital = Current Assets – Current Liabilities

If you have more assets than liabilities, you have positive working capital—which means you have enough cash on hand to cover your liabilities plus additional funds left over. On the flip side, if your liabilities are more than your assets, you have negative working capital. That means you don’t have enough money on hand to cover your financial obligations.

Both positive and negative working capital can give you key insights into the state of your business and the success of your business strategy. For example, if your working capital is extremely high (your assets far outweigh your liabilities), you’re not investing enough money into your business. You might create a business strategy to use some of your working capital to expand or target new clients in that scenario.

On the other hand, if you have negative working capital, you don’t have enough capital to cover your costs. You’ll need to adjust your strategy to focus on bringing more capital into the business—perhaps by applying for a business loan or increasing prices.

Use Financial KPIs to Drive Your Business Strategy

Hopefully, you now have a grasp on the most important financial metrics to track for your long-term financial health, how to calculate them, and what they signal about your existing business strategy.

When used correctly, these financial key performance indicators can help inform how you work to achieve your business objectives. They’ll unlock insights that could easily be overlooked otherwise and ideally help your business grow faster and more effectively.

Deanna deBara

Written by Deanna deBara , Freelance Contributor

Posted on December 30, 2019

Freshly picked for you

5 Ways to Get Your Team Excited About Accounting

Thanks for subscribing to the FreshBooks Blog Newsletter.

Expect the first one to arrive in your inbox in the next two weeks. Happy reading!

Available in:

Ondemand course, financial indicators that every business should know, don't get lost in the numbers - learn how to identify the most important financial indicators in your business..

Smart business decisions rely on effective financial management. Identifying problems and initiating corrective action is important to maximize shareholder wealth and ensure sustainability. Financial indicators allow you to understand the overall health of your business and meet these objectives. In today's environment, gaining greater insights in your process and operations are crucial. Make effective decisions by using indicators to achieve your goals for earnings, cash flow, and capital management. Gain confidence in your decisions when the market is unstable. Learn the financial indicators for operational and industry benchmarks. Heighten your skills to improve performance, efficiency, and value. Understand the difference between efficiency and productivity. Visualize problem areas to take corrective action. Evaluate your cash flow and long-term options. Accurately decipher balance sheet and profit and loss to track indicators and trends.

Lauritta Sowa

Lauritta Sowa

Wiseowlops, inc..

Add to Wishlist

More Program Information

Related training.

Live Webinar - March 21, 2023

Advanced Records Retention: Developing Issues in Cybersecurity Validation and Accountability

OnDemand Course -

Compliance With the PCI DSS Credit Card Security Standards

Understanding and Troubleshooting Copyright Law

Why Lorman?

Over 36 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Setting Your Goals

Managing Your Balance Sheet

Managing Your Profit and Loss Statement

This course was last revised on August 6, 2020.

Call 1-866-352-9540 for further credit information.

This program does NOT qualify, nor meet the National Standard for NASBA accreditation.

financial indicators in business plan

All of your training, right here at Lorman.

Pay once and get a full year of unlimited training in any format, any time!

Additional benefits include:

Questions? Call 877-296-2169 to speak with a real person.

Sign Up Today With This Course

Access to all training products for one year $699/year

Unlimited lorman training.

With the All-Access Pass there is no guessing what you will need for your yearly training budget. $699 will cover all of your training needs for an entire year!

Easy Registrations

Once you purchase your All-Access Pass you will never be any further than one-click away from attending any Lorman training course.

Invest in Yourself

You haven't gotten to where you are professionally by luck alone; it's taken a lot of hard work and training. Invest in yourself with the All-Access Pass.

Available in Multiple Formats

Purchase this course and learn on your schedule.

financial indicators in business plan

Purchase Options

This program is available in several formats. Please choose the best format for your needs:

OnDemand Course

All-Access Pass

Pay once and get a full year of unlimited training in any format, at anytime..


Explore how organizations like yours became data-centric with ClicData.

Use cases Explore possible ways to leverage ClicData across various sectors and topics

Testimonials Get inspired by our customers’ success stories

clicdata customer use cases

Our mission is to make data analytics accessible to all. Find all our Support, Services, and online resources here.

Support Get live support from our Data Analysts when you need it the most

Services Focus on your core business, let us do the rest

Dashboard examples Discover what you can achieve with our dashboard builder

eBooks and White papers Read, digest, re-think

Webinars New product demos and expert insights every month

clicdata company and culture

We are ClicData. We believe in data-driven betterment of the world, one person, one company, one community at a time.

About us Get to know our team of passionate people

Culture Think big, smart excellence, better together

Careers Grow with like-minded people

Press Endorsed by industry experts

Contact us Book a demo or tell us about your project

Logo ClicData

Your Top Six Financial Indicators

Achieving a firm and intricate understanding of your company’s financial picture may be the greatest challenge for any business owner, large or small. It’s estimated that even many Fortune 500 CEOs (as much as 30%) have devoted the first few years of their careers to understanding finance. There’s a tremendous amount of financial data to crunch.

On the other hand, you can’t lose yourself in the unending barrage of data. As a manager, business owner, or executive, it’s your job to see the bigger picture that all of the pixels paint for you. With more analytics available, and the intelligence of data visualization and enterprise-fed insights, you have the ability to track numbers, trends, metrics, and performance like never before.

So what are the most important indicators to track?

A quick reminder

Understanding critical financial indicators is key to making better-informed decisions for your business. So before we start, it’s important to know that most KPIs fall into 5 categories based on the information they measure:

If you’re a CEO or business owner, we recommend your dashboards include these key indicators:

KPI #1: Net Profit Margin

Divide net profit by net sales and you’ll have the number that reveals the efficiency with which your company converts its revenue into profits. It’s the percentage of revenue remaining, after all operating expenses, interest, taxes, and preferred stock dividends (if any) have been deducted from your company’s total revenue.

KPI #2: Gross Profit Margin

This is what we refer to when we talk about the “bottom line.” It’s a readily available metric of the business’s financial health and measures the ratio of your profit to your gross revenues. With adequate GPM, you’ll know if the business can pay its operating and other expenses and still build for the future. It’s also a great way to compare your productivity against your competitors.

KPI #3: Your Industry Metrics

Every industry has its own set of indicators that help drive profits. Pick 1-3 indicators that represent the metrics for yours. As a company leader, you’ll do well to compare these metrics with those of your competitors on a regular basis.

KPI #4: Debt/Equity Ratio

Divide your total liabilities by your company equity and you get this nifty number that tells you what proportion of your company’s equity and debt is being used to finance your assets. A lower ratio means you have a less risky financial structure.

KPI #5: Manufacturing Defects

If your company produces physical products, it’s valuable to calculate product defects as a percentage of manufacture to indicate how defect-free your production processes are.

KPI #6: Balance Sheet metrics

Stay on top of revenue, cash flow, assets, and liabilities per quarter or per year.

Start tracking financial indicators in dashboards

To monitor your financial performance effectively you can use real-time & intelligent dashboards to display these critical indicators. That way, you’ll gain a more strategic picture of your company’s performance based on key performance indicators that drive profitability, cash flow, and value.

Hope this helps, happy dashboarding!

You will also like:

How to make a simple financial report.

Blog How To Make Simple Financial Reports

Real-time financials: is there such a thing?

Real Time Financials

Share this on

Privacy Overview

Popular searches

Business Plan 2023

This business plan sets out our priorities for 2023 and will help businesses and the wider community understand our focus for the year ahead.

Download your full copy here


This 2023 business plan clearly states our priorities and ambition for the year ahead, helping industry and our wider stakeholder community to understand our focus.

Our Strategic Framework 2021-2024 outlines our vision to be a ‘high-performing regulator, building for the long-term success of Jersey’. As we embark on the second year of our strategic journey, the 2023 business plan outlines our core work streams and key initiatives. Aligned to our strategic anchors, we will continue to focus on preparations for the upcoming MONEYVAL assessment, digital transformation, and people strategy, as we seek to strengthen our capability as a high-performing organisation.

"The MONEYVAL assessment will be a critical test of the effectiveness of the Island’s approach to combatting financial crime."

We also clarify our forecast income and expenditure and reflect on what we achieved in 2022. Our organisation has emerged from the pandemic firmly focused on the delivery of our top strategic priority of ‘achieving sustainable long-term excellence in regulatory effectiveness and increased capability for the Island in combatting financial crime.’

Chair's statement

Our perimeter has been expanded as a consequence of new regimes including Virtual Asset Service Providers (VASPs) and Money or Value Transfer Services (MVTSs), and amended regimes such as Non-Profit Organisations (NPOs), etc. In addition, we have to respond to the increased complexity of the businesses we regulate as they digitise and innovate.

There is no doubt that 2022 was a year of profound change in the world. 2023 looks no different. As we emerged from a pandemic that has dominated most of our interactions for the last two years, we find ourselves in a vastly different world to that of pre-Covid. Changes driven by energy and food supply chain issues, the war in Ukraine, and de-globalisation are affecting the world we live in. These changes and the uncertainty they bring, are affecting all aspects of our personal and business life and feeding through to a more volatile economic future.

Whilst, instinctively, economic uncertainty and volatility leads to businesses and households adopting a more defensive or cautious position, our operating environment requires us to adapt and change. When I meet the Island’s Financial Services leaders, we talk about the challenges their businesses face: a challenging jobs market as people seek to recruit excellent staff, technological change as industry seeks to digitise, and the global move towards tougher regulatory standards. Their challenges are our challenges. This Business Plan sets out our response.

"Our operating environment requires us to adapt and change"

Whilst we will continue to invest in technology to improve the ease of doing business with the JFSC, we know this also enables us to operate more efficiently. However, alongside technology we have to invest more in our people. In part this is to address the increased cost of living, but also, and more significantly, to respond to the expansion in the regulatory perimeter proposed by the Government of Jersey in response to international initiatives. Together these changes will increase our costs by £4.3m, resulting in a forecast deficit for FY23 of £2.2m, but because we have significant reserves, we will seek to recover these additional costs through fees arising from new registrations due to our expanded remit and a gradual increase in fees as opposed to a more sudden approach.

Our perimeter has been expanded as a consequence of new regimes such as VASPs, NPOs, etc. In addition, we have to respond to the increased complexity of the businesses we regulate as they digitise and innovate.

Our focus in 2023 will be the continued implementation of the Strategic Framework we launched in November 2021, which reaffirmed the centrality of combatting financial crime to our work. In pursuit of this we will focus on three core work streams, each linked to one of our strategic anchors (Business Integrity, Harnessing Technology, and Building a High-Performing Organisation) and three key initiatives designed to bring additional value to our finance industry by focusing on enhanced industry engagement, continuous improvement activities, and other regulatory improvements.

Of course, the continued development of the JFSC in 2023 will take place against the backdrop of the MONEYVAL inspection in Autumn this year. Across the organisation there has been a tremendous focus on preparing for this as well as strong engagement with Government, other agencies, and industry.

Shortly after we published our Business Plan for 2022, the JFSC appointed Jill Britton as its Director General. I want to take this opportunity to thank Jill and all the team at the JFSC for their resilience and commitment in the face of challenging circumstances. I know that they stand ready to take forward the work outlined in this Business Plan.

Our strategy

Core work streams, key initiatives, key performance indicators, managing complexity and the increased regulatory perimeter, 2023 income and expenditure, our 2023 business plan.

Download a full copy of our 2023 Business Plan

This website uses cookies to analyse our traffic. To find out more read our cookie policy .

Key Performance Indicators KPI and Ratios in a Business Plan

The Enloop online business plan software provides you with a breakdown of 25 financial ratios, also known as Key Performance Indicators (or KPI) for your company, based on how you forecast your financial performance. We also compare your company's financial ratios against your industry's median for 17 of those ratios.

How KPI and Financial Ratios Help Your Business Plan

We provide a detailed analysis of your financial ratios and compare your forecasts with your industry's averages. We provide tips and guidance on how to improve yours. Viewing and understanding ratios is an important part of knowing how your company might perform. We show these to you so you'll understand how your company stacks up against the rest of your industry. You can use this really helpful feature to continually refine your financial forecasts until you're in-line with your industry's averages. This is particularly helpful if you're a new business, as it helps you make more realistic projections.

Your goal is to work to improve your plan so you pass as many of the ratios as you can. You should also try to understand why you're failing any ratios. In the Enloop Business Plan Scoring system you need to pass the three common ratios to receive a passing score on your business plan's report card. If you find that you're failing in a ratio but have a good explanation, include the explanation in the text portion of the Ratio section. If you're seeking funding, this should help you explain the poor ratio to a loan underwriter or investor, who will likely ask. Here are the three critical Ratios you need to pass in the Enloop Business Plan Scoring system:

Understanding and Improving Your Financial Ratios

Clicking on each ratio brings up a detailed view of how your company is projected to perform compared to its industry average. We include a complete explanation of the ratio, including the actual math for how the ratio is determined, and tips on how to improve your ratio if you're under- or over-performing your industry's average.

If your financial forecasts are not in-line with your industry's averages, you might be over- or under-projecting your company's performance. Knowing how the rest of your industry performs can be very helpful in modeling your forecasts. You should at least forecast to perform within industry averages, and this feature provides a nice way to think about your expectations.

The feature offers you the opportunity to identify and avert a cash flow problem for your business by alerting you if you're under-projecting or over-projecting your forecasts

If your company has been in business for a while and you can substantiate your projections, that's great. But if you're a new business and your forecasts are above industry averages, you might have an unrealistic expectation of how your company might perform. It's common for new business owners to think they'll perform better than they actually do, which leads to a cash crunch and a failed company. Enloop attempts to help you avoid that scenario. 

Think of it as a helpful red flag that allows you to correct your expectations before you get into actual trouble with real money. It's better to be conservative when you're forecasting revenue and costs for a new business ... which is a tricky task. Comparing your forecasts to how others in your industry actually perform can be very sobering and helpful, forcing you to really think about whether you're wearing rose colored glasses. That's a super helpful feature to take advantage of in Enloop.

Financial Ratio Pass/Fail Grades

We provide a 'Pass/Fail' for each ratio by evaluating your performance on a quartile scale. Ratios are analyzed based on your company's third year of financial projections. We do this because it's not usually until a company's third year that a stable financial forecast is achieved. New companies are failed for exceeding industry averages because there's no evidence yet to support your forecasts and most companies that go out of business do so because they could not achieve their overly optimistic revenue forecasts. Existing companies may exceed industry averages, as we assume they have existing financial data to support their forecasts and have a good idea of how they'll likely perform based on historical evidence.

List of Key Performance Ratios in Enloop Business Plan Software

Three critical financial ratios are available at the Detailed subscription level :

All twenty-five financial ratios are available at the Performance subscription level :

Browser out of date.

It appears you're running on a very old web browser that we're unable to support. If you would like to view the site you'll need to update your browser. Please choose from any of the following modern browsers. Thanks!

Google Chrome

Google Chrome

Mozilla Firefox

Mozilla Firefox


Internet Explorer

The 5 best indicators of business growth

Updated: August 14th, 2019

The 5 best indicators of business growth

In this article:

Most businesses share a common goal no matter what stage they’re in: to grow. Business growth, however, is a relative concept. Depending on your industry, goals, and finances, growth might mean opening a second location, increasing profits by 5%, or expanding your product line. 

Measuring your business’ growth isn’t an exact science, but it’s crucial to your operation’s success. Observing and analyzing different areas of your business shows you what you’re doing right and what you can improve upon. 

To figure out whether or not your business is growing, start by considering the factors most critical to your operation’s success right now. If your business is newer, then social media engagement and website traffic might be better indicators of growth than profits. On the other hand, if your business has a loyal customer base, you could look at cash flow and accounts receivable to measure progress.  

Regardless of your business’ growth goals, key performance indicators (KPIs) can help. KPIs are quantifiable measurements you can use to track your business’ progress in every area, including sales, marketing, finances, and operations.

Here are a few examples of common KPIs:

Tracking and analyzing your KPIs on a regular basis will show you where to focus your efforts, but you should also look to certain areas for signs of growth. 

Here are five top indications of business growth : 

1. Inventory is running out

High inventory turnover is a sign that your products are in demand. If you have to replace items at a rapid rate, you may be landing more sales and expanding your customer base. To calculate your inventory turnover ratio, use the following formula:

Cost of Goods Sold / Average Inventory = Inventory Turnover Ratio

Inventory turnover varies depending on your products and business, so it’s a good idea to compare your number to the national averages for your industry. Retail stores, for example, generally have inventory turnover ratios of four or five, while grocery stores have ratios above 10. 

An inventory ratio above your industry’s national average can signify growing demand for your business. However, if your ratio is substantially higher than the average, it could because you’re not stocking enough inventory to keep up with sales. 

Watch your turnover rate for a few months. If it’s consistently high and you’re not under-stocking, consider purchasing more inventory or expanding your product line.

2. Profits or revenue are increasing

Examining your business’ finances, particularly your profits, losses, and revenue, is one of the most accurate ways to measure growth. Profits refer to your net earnings after you pay for expenses and operating costs. Losses refer to any costs that exceed your revenue, which is the amount of money you’re bringing in from sales. 

To figure out how much you’re profiting, start by reviewing your income statement, cash flow statement, and balance sheet. You may want to consult an accountant to help guide you through the process. If you have more profits than losses, your business is likely in good financial health. 

Keep in mind, though, that higher profits don’t always indicate growth. If, for example, you’ve maintained the same amount of profits for years — even if those profits exceed your losses — your business may be at a standstill. That’s why it’s important to look at revenue and sales, too. Rising revenue or sales can be a sign of growth, particularly for newer businesses that are still gaining traction and may not be profitable for a while. 

3. You have to hire new employees

If your team is consistently busy with appointments, projects, or clients, your business is probably in high demand. You may need to hire additional employees just to keep up with the pace of work if:

Even if cash flow is tight, bringing on a new employee can pay dividends long-term. Extra help can give you the time and resources to fulfill more orders, expand your clientele, or say yes to bigger projects. 

4. Your cash flow is improving

Cash flow is the amount of money coming into and going out of your business through areas like accounts payable, accounts receivable, expenses, and sales. Positive cash flow is the result of reduced spending, increased revenue or sales, or a combination of the two. 

While healthy cash flow doesn’t always correlate with business growth, it does suggest your business is in a stable financial position. And good finances are often the foundation of business growth. 

If you’ve noticed an increase in your business’ cash flow for several consecutive months — and your spending has remained the same — that’s a good indication that your revenue is improving. Positive cash flow also has a cumulative effect. When you free up funds, you have more money to dedicate to growth projects, like remodeling, hiring, or moving to a new location. 

5. There’s buzz around your business

Business growth isn’t always quantifiable. The general excitement around your business or brand can be a great indicator of your company’s forward movement.

High social media engagement, for example, suggests satisfied, loyal customers, while sales from returning customers indicate an ongoing demand for your products or services. If your brick and mortar is growing, customers may plead with you to open a second store. Or, if you have an e-commerce shop, you might get frequent requests to ship your products to new cities or states. 

Signs of growth don’t just come from customers and clients, though. You might get a call from an investor, see your company featured in an online round-up, or receive a message from another business about collaborating on a campaign. 

Measure, then take action

Measuring your business’ growth only gets you so far — you also have to take action. Whether you see a spike in profits or simply witness a growing demand for your business, consider how you can use your newfound knowledge to set your business up for long-term growth. That might mean doubling down on marketing methods with a high ROI, eliminating ineffective products, or changing your sales strategy.

Affordable business financing. Crazy fast.

Funds delivered in days, not months.

Paige Smith

Paige Smith is a content marketing writer who specializes in writing about the intersection of business, finance, and tech. Paige regularly writes for a number of B2B industry leaders, including fintech companies, small business lenders, and business credit resource sites.

Tags: Expansion

Keep Reading See all articles

Finding a new market for your business: where and how to expand.

Growth and Operations

5 Essential Strategies for Growing Your Medical Practice

How an mca can help maximize holiday sales, take your business further ..

financial indicators in business plan

Sign up for Funding Circle newsletter!

Get our latest news and information on business finance, management and growth.

financial indicators in business plan

Fast, Affordable Business Loans:

Get in touch:, join the community:, great review:, sign up for the funding circle newsletter.

Go to InvoiceBerry homepage

InvoiceBerry Blog

Small business | invoicing | marketing | entrepreneurship | freelancing, 11 important financial kpis for your business.

financial indicators in business plan

Key Performance Indicators, or KPIs for short, are a type of performance measurement units that you can use in many ways to help your business grow.

For SMBs, keeping track of the finances is a sure way to determine if you’re on the right track, in terms of your success and sustainability.

Try our online invoicing software for free

financial indicators in business plan

Once you’ve developed a business plan and set clear goals you want to achieve, the next step is managing your money via some of the important financial KPIs for your business. Managing your finances is essential if you ever plan to scale up in the future and don’t go bankrupt after a year.

What makes finances so interesting is that it can be applied to all people and all types of businesses – regardless of the size, industry, and so on. No matter what, the finance part always stays the same and can determine if you’re on the right trajectory as a business.

This is why it’s so important to keep track of your money. Often times, the data crunching and the many complicated numbers that show up in your records scare away a lot of people.

While it’s true that finance can be complicated – it’s also an essential skill you want to be on top of when running your business.

And if you want to continue operating your business and stay sustainable, it’s important you keep track of your finances.

There are many important financial key performance indicators and numbers you want to keep track of. So, grab a piece of paper and be ready to take notes.

Simply managing your finances well can make or break your business. But on the bright side, there is a lot of accounting software and online information to help you out when you’re just starting. And if you’re keeping track of your finances without an accountant – it’s essential you know where the money flows.

So, with that said, here’s a list of the important financial KPIs you might want to be keeping track of when running your business.

Follow the money and see where it leads.

1. gross profit margin kpi.

Money isn’t the most important thing in the world, but it’s often what everyone looks at in a business. Net worth, profitability, profit and costs are some of the many terms you might have heard of when talking about finances.

But if we’re going to be talking about money, it’s important we first discuss gross profit and what it means for your business.


Gross profit simply means the total revenue of your company, minus the cost of goods sold. And it’s a simple way to measure your profitability as a business.

Gross profit margin, meanwhile, tells you whether or not you’re pricing your goods or services appropriately. Here’s how you evaluate that:

Gross Profit Margin = (revenue – cost of goods sold)/revenue.

Unlike the gross profit KPI, the margin measures your company’s production efficiency over the years.

If there’s one KPI you’re going to keeping track of, make sure it’s the gross profit margin.

So, make sure your company is breathing well before you move on to the next steps.

2. Net Profit Margin KPI

This is another straightforward but important KPI that is important for your business’s health.

The net profit margin shows your business’s effectiveness by showing you how much profit you make for each dollar of sales you generate. It is calculated by the following:

Net profit margin = net profit / revenue.

If your company has a net profit margin of 50%, for example, this means you generate 50 cents of profit for each dollar of sales you make.


Net profit margin is important in that it shows your firm’s potential net worth based on your earnings. If you want to achieve a positive net profit at the end of the year, you should start with the net profit margin.

3. Revenue growth KPI

However, if you want to grow as a business and eventually scale up, your revenue (note: this is different from profit ) is something you should always be tracking.

Revenue growth, as the name implies, is an increase in your company’s sales, usually compared to your previous quarters’ revenue performance. It helps you find out if you’re on the right track as a business in terms of financial growth. And if this is not the case, you need to gain a better understanding of your important financial numbers .

Calculating revenue growth is fairly simple, here’s how you do it:

If done well, you’ll get a percentage number as your revenue growth KPI and the higher the number is – the better.

If, for some reason, your business is in the red, this is something you need to figure it out ASAP.

The issue could lay with your customers, your product or something completely else. And if your revenue growth KPI is constantly negative – you might want to start saving money or risk going bankrupt.

4. Return on Investment (ROI) KPI

This is another simple KPI you probably have already heard of.

This performance indicator evaluates your efficiency in regards to the investment ( or, the return on the investment . Simple, right?). Essentially it measures if your investment was worth it or not from a business standpoint.

ROI = (gain from investment – cost of investment) / cost of investment.

The gain from investment refers to the proceeds obtained from the sale of the investment of the interest.


That is to say, it measures if the efficiency on your investment was worth it in terms of the payoff. ROI is a simple way you can calculate if it’s worth to put money into a particular project.

5. Return on Equity (ROE) KPI

Similar to the above formula, but as the name implies, this indicator measures the return on the shareholders’ equity instead.

ROE is expressed as a percent and is calculated by the following:

Return on Equity = Net Income/Shareholder’s Equity

This formula is also known as return on net worth and compares your net income to the overall wealth of your business, for the size of your company. It essentially tells you how much profit your company generates with the money the shareholders have invested.

6. Income Sources KPI

This one’s obvious but still an important KPI you should be tracking.

Similarly to when you’re tracking your revenue, you should also be aware of your net income and where it’s coming from.

Your revenue can come in from many different streams and funnels, and you should be aware of each and every one of them.

It’s important you know which segments are profitable and worth pursuing – and which are not if you want to stay afloat. And the more you know about each business segment, the more likely you are to make better business decisions.


For example, if you’re still in the start-up phase, having a side hustle often provides an extra revenue stream in addition to your main streams. Depending on your business situation, you might want to continue pursuing it or drop it altogether if you have better income sources elsewhere.

7. Operating Cash Flow KPI

Operating activities are a part of your cash flow statement and indicate whether your company can generate enough cash flow to maintain or grow your operations.

This includes things like revenues (from sales, accounts receivable, refunds, etc.) and expenses (payments to employees and suppliers, fines, fees, etc.)

This is another important KPI as far as scaling up as a business goes. Ideally, you should know if your business is producing enough profit to match the investments you’re putting in your business.

You need to asses how well your business is doing and the operating cash flow is a great way to measure the health of your business.

Once you calculate your operating cash flow, you can then compare it to your total capital employed (that is to say, total capital used for profit acquisition) to see beyond just your profits.

8. Current Ratio KPI

This is a quick and simple liquidity ratio to determine whether your business has enough resources to meet its short-term obligations on time.

The current ratio is also known as the working capital ratio, and is also crucial for growth and scaling up. To find out your company’s current ratio, all you have to do is divide your current assets by your current liabilities .

If the ratio is under 1, this means your company’s liabilities are more than its assets – which can be a bad sign, depending on your industry. If this is the case, you’ll probably have trouble paying off your current obligations.

The higher the ratio – the more capable you are of paying off your obligations.

9. Working Capital KPI

Working capital, sometimes also called the net-working capital, is the difference between your company’s current assets (cash, accounts receivable, etc.) and your current liabilities (accounts payable, for example).

In short: this KPI measures your company’s efficiency and short-term financial health.

A good working capital ratio is anywhere between 1.2 and 2.0, while having less than 1.0 indicates negative working capital.

If your working capital is under 1.0, you might have potential liquidity problems. Meanwhile, if it’s over 2.0, you might not be using your excess assets effectively.

10. Revenue Per Employee KPI

This financial indicator measures your company’s total revenue per the number of your current employees. It basically tells you how much money is generated from each employee.

The formula for this indicator is simple and is calculated by the following:

Revenue Per Employee = Revenue/# of employees.

This ratio is a great way to tell how well you’re doing compared to your competitors in the same industry or to see the change in your company’s figures over the years.

Ideally, a company wants the highest efficiency possible. In this case, this means the highest revenue possible per employee. So, with the above formula, you can measure the productivity and efficiency of each employee.


Of course, it’s not always a numbers game and just because an employee isn’t generating as much revenue as possible – doesn’t mean they’re not useful.

However, if you’re seeking to maximize efficiency and want to see how well you’re using your human capital – the indicator can tell you a lot about your firm.

11. Days Sales Outstanding (DSO) KPI

This indicator is important for any business as it tells you the average number of days it requires for a client to pay your company, from receiving the invoice until the final payment.

DSO is often determined on a weekly, monthly, or a quarterly basis. And the smaller your number is – the better your cash flow.

Ideally, you should be tracking your expenses as well, along with your invoices.

You can then use that to reinvest into the company. If the number is less than 133% of the agreed payment date, you’re on the right track.

For example, if your invoice due date was 30 days, the DSO has to be 40 days or less. If it’s more than that, you should seek ways to decrease invoice payment times.

Putting the Knowledge to Work

All in all, there are more financial KPIs out there, but you may even end up using less. A lot depends on your needs and requirements.

So, it’s important to set clear SMART (specific, measurable, attainable, relevant, timely) goals first. Depending on your goals, you can then track as many KPIs as needed. There is no need to be tracking everything if it doesn’t benefit your company.

This is why it’s hard to generalize financial KPIs – each of them has a different intent.

So, for example, if you’re seeking to save money , you might want to be keeping track of financial savings KPI. But if you’re seeking to grow as a business and see how well you’re doing in terms of data – revenue growth might be the KPI for you.

With that said, accounting is a complex and a tough world to get into. If you’re not sure what you’re doing, consider adopting an accounting software to boost your business and get rid of manual bookkeeping.

If it’s the terms you’re not sure about and need to Google every other term you come across, you can check out the InvoiceBerry accounting dictionary for a list of all the helpful accounting terms.

Keeping track of your finances is a vital step as a business owner, especially if you’re just starting out. So, be sure to utilize as many resources and information you need to help you get started.

Recommended Articles

Ready to start invoicing your clients with invoiceberry.

Sign up to our free trial account. No credit card required.

Read previous post:


Comprehensive Guide to Becoming a Digital Nomad In 2018

Have you ever wanted to work from the comforts of a sunny beach? All while sunbathing and sipping on a...


More Like this

27 examples of key performance indicators.

As your organization begins to sketch what your plan might look like, it’s likely come to your attention you’ll need to gain consensus around what your Key Performance Indicators will be and how they will impact your business. Even if you haven’t even thought about your KPIs yet [that’s ok too], we’ve compiled a list of examples for you to reference as you plan.

But, before we jump straight into examples, here’s a quick refresher on the meaning of KPIs [Key Performance Indicators] and why they’re a critical part of managing your plan on an ongoing basis.

KPIs video


What is a KPI?

Key Performance Indicators (KPIs) are the elements of your plan that express what you want to achieve by when. They are the quantifiable, outcome-based statements you’ll use to measure if you’re on track to meet your goals or objectives. Good plans use 5-7 KPIs to manage and track the progress of their plan. The anatomy of a structured KPI includes:

KPI Examples

Now that we’ve reviewed the basic anatomy of a KPI, here are 27 examples of common KPI sources we see organizations use to measure the performance of their plans:

Get the Free Guide for Creating KPIs (with 100 Examples!)

Examples of sales kpis.

Examples of Financial KPIs

Examples of Customer KPIs

Examples of Operational KPIs

Examples of Marketing KPIs

[Bonus] +35 Extra Examples of Key Performance Indicators

Supply chain example key performance indicators.

Healthcare Example Key Performance Indicators

Human Resource Example Key Performance Indicators

Social Media Example Key Performance Indicators

With the foundational knowledge of the KPI anatomy and a few example starting points, it’s important you build out these metrics to be detailed and have specific data sources so you can truly evaluate if you’re achieving your goals. Remember, these are going to be the 5-7 core metrics you’ll be living by for the next 12 months. A combination of leading and lagging KPIs will paint a clear picture of your organization’s strategic performance and empower you to make agile decisions to impact the success of your team. If you’d like more information on how you can build better KPIs, check out the video above and click here to see why not all KPIs are created equal.

Our Other KPI Resources

We have several other great resources to consider as you build your organization’s Key Performance Indicators! Checkout these other helpful posts and guides:

FAQs on Key Performance Indicators

KPI stands for Key Performance Indicators. KPIs are the elements of your organization’s business or strategic plan that express what outcomes you are seeking and how you will measure their success. They express what you need to achieve by when. KPIs are always quantifiable, outcome-based statements to measure if you’re on track to meet your goals and objectives.

The 4 elements of key performance indicators are:


' src=

HI Erica hope your are doing well, Sometime Strategy doesn’t cover all the activities through the company, like maintenance for example may be quality control …. sure they have a contribution in the overall goals achievement but there is no specific new requirement for them unless doing their job, do u think its better to develop a specific KPIs for these department? waiting your recommendation

' src=

Thanks for your strategic KPIs

' src=

Hello Erica, Could you please clarify how to set KPIs for the Strategic Planning team?

' src=

Hi Diana, check out the whitepaper above for more insight!

Hello Erica, Could you please clarify, how to set the KPIs for the Strategic PLanning team?

' src=

exampels of empowerment kpis

' src=

I found great information in this article. In any case, the characteristics that KPIs must have are: measurability, effectiveness, relevance, utility and feasibility

' src=

How to write methodology guidelines for strategy implementation / a company’s review and tracking (process and workflow) for all a company’s divisions

' src=

support on strategizing Learning & Development for Automobile dealership

' src=

Could you please to clarify how to write the KPIs for the Secretary.

Check out our guide to creating KPIs for more help here: https://onstrategyhq.com/kpi-guide-download/

Comments Cancel

Join 60,000 other leaders engaged in transforming their organizations., subscribe to get the latest agile strategy best practices, free guides, case studies, and videos in your inbox every week..


Advancing Knowledge in Financial Planning

Nerds Eye View

CE numbers not found!

CE numbers are required for Kitces to report your credits. Would you like to add your CE numbers now?

Please contact your Firm's Group Admin

IAR CE is only available if your organization contracts with Kitces.com for the credit. Please contact your firm's group administrator to enable this feature. If you do not know who your group administrator is you may contact [email protected]


Purchase your early bird pass and receive a kitces-blue goodies mystery box.

Kitces Marketing Summit Thursday, April 27 | 12:00 – 4:00 PM ET

Purchase Early Bird

Early Bird Deadline is TODAY, March 3

What Are The Key Performance Indicators (KPIs) For Your Financial Planning Firm?

June 2, 2014 07:02 am 8 Comments CATEGORY: Practice Management

Executive Summary

As an advisory business gets started, the focal point is typically on just getting the first few paying clients in the door – the key aspect being paying clients. Simply put, it’s all about just trying to generate some revenue, and the key indicator for measuring the advisory firm is pretty straightforward: how much revenue is there.

However, as the advisory practice begins to grow, the picture gets more complex. Soon there are a range of different clients, paying varying fees for what may be a varying services. The cost to operate the business begins to rise as well, with investments into anything/everything from technology to staff. Suddenly, just look at how much money is coming in the door is no longer enough; just because there’s revenue doesn’t mean there’s profits, and there are too many clients to just keep it all straight in your head.

Accordingly, as a financial advisory practice grows, it becomes increasingly important measure and track more information about the business, so it can be managed as a business. As the saying goes, “if you can’t measure it, you can’t manage it.” Building a financial dashboard of “Key Performance Indicators” (KPIs) that track key metrics of the business, its growth, and its clientele, can give you the information you need to make better practice management decisions. It's not necessarily about harnessing the "big data" insights of an entire industry, but simply the "small data" opportunities of better understanding your own business!

Michael Kitces

Author: Michael Kitces

Michael Kitces is Head of Planning Strategy at Buckingham Strategic Wealth , which provides an evidence-based approach to private wealth management for near- and current retirees, and Buckingham Strategic Partners , a turnkey wealth management services provider supporting thousands of independent financial advisors through the scaling phase of growth.

In addition, he is a co-founder of the XY Planning Network , AdvicePay , fpPathfinder , and New Planner Recruiting , the former Practitioner Editor of the Journal of Financial Planning, the host of the Financial Advisor Success podcast, and the publisher of the popular financial planning industry blog Nerd’s Eye View through his website Kitces.com , dedicated to advancing knowledge in financial planning. In 2010, Michael was recognized with one of the FPA’s “Heart of Financial Planning” awards for his dedication and work in advancing the profession.

KPIs About The Financial Health Of Your Business

The first key step in understanding an advisory firm beyond just its revenue (or its AUM as a proxy for revenue) is to look at the costs to generate that revenue, and the profits that remain after a reasonable allocation of costs.

In benchmarking advisory firms, expenses are usually broken down into two broad categories: direct expenses, and overhead expenses. Direct expenses represent the cost to acquire and directly service clients; in other words, the cost of the financial advisors who work directly with clients. Overhead expenses includes… everything else, from operations and administrative (and for larger firms, management) staff, to office space, to the various technology and software tools the firm uses.

How To Value, Buy, Or Sell A Financial Advisory Practice - by Mark Tibergien and Owen Dahl

For solo advisors, allocate a “direct expense” estimate to account for the cost it would take to hire another advisor to do the owner’s job; this is crucial to understanding whether the advisory firm is actually profitable as a business with a net profit margin after the owner’s compensation, or if the reality is simply that the value of the business is the owner’s ability to pay their own salary-equivalent but with no actual profits left over. By contrast, larger firms may wish to examine the revenue per advisor across each advisory team in the practice to understand which teams are responsible for the most revenue and/or profits.

KPIs for The Growth Of Your Business

Of course, it’s one thing to understand the profit margins of the advisory firm in the current year; it’s another to look at how those numbers change over time as the firm grows. Accordingly, when it comes to growth, there are two more key performance indicators: growth rate, and retention rate. After all, for a firm to grow, it matters not only what comes in, but also how much revenue is retained!

Growth for an advisory firm in turn can be broken down into two categories: new revenue from new clients, and new revenue from existing clients (e.g., clients who hire you for more services, buy additional products, add AUM to their managed account, etc.). For a firm that’s generating more revenue overall, this helps to clarify where it’s coming from – is the firm primarily adding more clients, or primarily generating more revenue from existing clients? Notably, firms that are paid on an AUM basis may also wish to separate out new revenue from market performance (growth) that increases AUM, versus new revenue that comes from clients actually contributing net new dollars. This distinction is especially important to understand the potential impact of a bear market on the revenue of the firm; for instance, if most new revenue is because clients are adding assets, the firm can potentially grow through a bear market, while if most revenue growth is just from portfolio growth, then revenue is at significant risk of decline if the market declines as well.

In addition to looking at new revenue coming in, it’s also important to understand how much revenue is being retained from year to year. Key metrics in this category include the percentage of revenue that is recurring in the first place (e.g.,ongoing trails, AUM, or retainer fees, versus one-time planning fees, hourly fees, or upfront commissions), and the percentage of clients that are retained each year. AUM firms may wish to delve into this even further, looking at the percentage of clients retained versus lost, the percentage of assets retained versus lost, and the percentage of assets that flowed out even though the clients were retained (e.g., due to retirees taking withdrawals or paying taxes). Of course, looking at typical turnover of clients also provides some indication of the average tenure of clients with the firm (as businesses that turn over clients at a higher rate will have lower retention rates).

For example, the chart below shows a version of how these numbers trended for the average “super ensemble” (more than $1B of AUM) firms in the latest Moss Adams/Investment News Benchmarking Study . The results show that the typical large firm grew new assets by 12% (of which 7.5% was new clients and 4.5% was existing clients), but also lost approximately 6% of assets in outflows (half from losing clients, half due to withdrawals from existing clients), resulting in a net asset growth (‘organic’ growth) of approximately 6%; by contrast, market performance alone contributed about 8%, which means more than half the firm’s growth rate was still being driven by market returns!

Moss Adams Growth Metrics - Financial Advisor 2012 Benchmarking Study

KPIs for the Clients In Your Advisory Practice

In addition to looking at the firm’s overall profitability, and the trends in its growth rate, it’s also important to look at the revenues and profitability of individual clients across the firm. The starting point is to simply look at the average revenue per client. How much, on average, does each client pay to the firm (determined by simply dividing the number of clients into the total revenue of the firm). And what is the distribution of revenue paid from each client? For instance, the chart below illustrates two different advisory firms, which each generate a healthy average revenue/client of $5,750. However Firm A has the bulk of its clients right in the midst of its sweet spot around its average, while Firm B essentially has a “barbell” practice, with a large segment of wealthy clientele balancing out (and effectively subsidizing) a large base of small (likely unprofitable) clients.

Distribution Of Client Fees - KPI Metrics For Financial Advisors

In addition to looking at the overall distribution of client fees, firms should also tracking client revenue by age, which can provide important insight into potential client revenue loss (or not!) due to retirement withdrawals or even attrition due to death .

For instance, the data below recharacterizes the same firms A and B from above, but delineates total revenue and average revenue/client by age. From the above data, it appeared as though Firm A was the ‘healthiest’ with a large core of clients paying consistent fees, while Firm B was far more scattered with a ‘barbell’ distribution of low-revenue clients being subsidized by high-revenue clients. However, when categorized by age, the data reveals that while Firm A may be a firm consistently working with retirees, Firm B may actually be far healthier in the long run, as the higher income clients are almost exclusively at the young end of the spectrum and the lower revenue clients are all much older ‘legacy’ clients of the firm who will slowly attrition away.

Distribution Of Client Revenue By Age- Financial Advisor KPI Metrics

In another 10 years, 80% of Firm A’s revenue will be concentrated with clients in their 70s and 80s with a high withdrawal/death/attrition rate, while almost 2/3rds of Firm B’s revenue will still be from clients who haven’t even retired yet and are still saving and adding to the portfolio, and the majority of Firm B’s low-revenue clients may be gone entirely at that point! To say the least, viewing client revenue by age reveals significant and meaningful differences in the long-term health of the businesses!

Ideally, a firm should also have metrics to track how much time is spent on behalf of each client by the advisor and various staff (or at least track how much activity occurs on behalf of each client to estimate the time spent ). By assigning a ‘cost’ to the value of the time for each staff member and the advisor, the firm can then make an estimate of revenue/hour for various clients, and the profitability of each client.

Benchmarking, Strategic Goals, And Management By Measurement

Ultimately, the goal of this exercise is to recognize that potential problems can’t be managed, and strategic goals can’t be set, until there’s a mechanism to measure and monitor the financial health of the firm, its growth, and its clients in the first place. Simply put, as the saying goes, “if you can’t measure it, you can’t manage it.”

Accordingly, for firms that have never gone through the exercise, try building your own “financial dashboard” for your own advisory practice (the process of doing so may also highlight some areas where you could better manage and track the data in your practice!), including these key performance indicators (KPIs):

Firm Metrics - Gross Revenue - Direct Expenses (including reasonable salary for owner’s compensation!) - Overhead Expenses - Gross Profit Margin - Net/Operating Profit Margin Growth - New amount/percentage of revenue from new clients - New amount/percentage revenue from existing clients - %age of revenue that’s recurring - Client retention rate - Revenue (or asset) retention rate Clients - Average revenue/client - Distribution of revenue/client - Distribution (and average) of client age - Distribution of revenue (or revenue/client) by client age - Client revenue/hour and profit/client

Once the metrics have been tabulated the first time, they can be updated (at least annually, but ideally even more frequently) for the firm, providing perspective on how these key performance indicators for the business are changing over time. In turn, the data can then be compared to industry benchmarking surveys to identify potential problems (e.g., high gross margins but low operating margins suggest the firm has too much overhead), to identify the overall profitability of the firm and its capacity of its profit margin to absorb a challenging business environment , to determine whether the firm is still growing at a healthy pace ( which is crucial to create growth opportunities for staff ), and to review whether services or fees need to be adjusted for particular clients whose revenue or profitability may be out of whack. From the planning perspective, firms may wish to focus on improving particular metrics from one year to the next, or hold partners accountable for improving a particular metric as a part of their responsibilities to the firm.

The bottom line, though, is simply this: the only way to effective manage a business based on the data is to have the data in the first place. If you’re not measuring the key performance indicators of the financial health of your advisory firm, there’s no way you can be aware – not to mention try to fix – any problems that become apparent. Fortunately, though, the data of a financial planning firm is not "so" complex as to make it an impossible big data challenge; instead, it's simply about harnessing the "small data" already in your CRM, portfolio management, and other software! So in the coming months, as client meetings slow down for the summer, try compiling your own practice management dashboard of key performance indicators, and begin to get some better perspective on where your practice stands, beyond just the sheer amount of gross revenue (or AUM) coming in the door!

So what do you think? Do these Key Performance Indicators (KPIs) seem relevant to you? Are there any missing from the list that you think are relevant? What KPIs are on the financial dashboard for your practice? What do you use to regularly monitor and track the health of your business?

Print Friendly, PDF & Email

Showcase YOUR Expertise

Submit Podcast Guest Submit Guest Webinar Submit Guest Post Submit Summit Guest Presentation

Stay In Touch

Kitces.com on Facebook

General Inquiries: [email protected]

Members Assistance: [email protected]

All Other Questions, Or Reach Michael Directly:

This browser is no longer supported by Microsoft and may have performance, security, or missing functionality issues. For the best experience using Kitces.com we recommend using one of the following browsers.

Log in to Kitces.com to complete the purchase of your Summit

Username or Email Address

Remember Me

Forgot my password  

Log in to  Kitces.com  to complete the purchase of your Course

To complete this Course purchase, you must log in to your Kitces.com account, or create a Reader account if you don't already have one.

Login to Kitces.com

Don't have an account?

Set up a free Reader Account to save articles and purchase courses.

Friend's Email Address

Your Email Address

financial indicators in business plan

Video Library

financial indicators in business plan

Key Factors Of Financial Planning In Business – Financial KPI Examples, Common Misconceptions & Importance Of Financial Plan

' src=

“ No one has ever achieved financial fitness with a January resolution that’s abandoned by February” – Suze Orman

For any organization, business or startup financial planning brings in a lot of benefits. It tells you what your financial goals are, your budget for the project and how you have to manage your finances well.

In this article, we will be covering the financial planning KPIs, the common misconceptions about financial planning and the importance of financial planning in business.

Proper financial planning helps in managing your business’s cash flow and helps in saving as well. A company’s profit rate might not be the same throughout the year. It increases and decreases depending on its demand in the market. So there might be instances of loss as well. That’s when a financial plan comes into the picture. It prepares you for the worst and with a financial plan in hand, you would be able to tackle the situations and will not have any shortage of money at that time. Key factors of financial planning include planning, budgeting, managing taxes, revenue, and investment come under a financial plan.

Learn more about –   Financial Planning Checklist (Business) – A Complete Guide To Key Factors & Elements Of A Financial Plan in Business

Financial Planning KPIs in a Business

Key performance indicators or KPIs in simple words are the approximate value that shows how your company is taking steps to achieve its goals and objectives.

The below-mentioned matrix is some finance KPIs in a business.

1. Revenue / Sales

Revenue is basically the total amount that your business has generated in a particular month by selling the product or service to the consumers or other businesses that might need the product or service that you offer.

2. Expenses/ Investment

Investment is the actual money you have put in to get the desired revenue. It includes the expenses of equipment, rent of the place, labour’s pay and expenses of all other supplies that are needed for the business.

3. Cash Flow

Cash flow in simple words is the amount of money that is coming to you and going from you. If the money that is coming to you is greater than the money that is going out from you then your company has a positive cash flow and is yielding good results.

Free Power Kit

Examples of Key Performance Indicators for Finance

Examples of Key Performance Indicators for Sales and Marketing

Now let’s look at the common misconceptions about financial planning and get to know why they are wrong.

Common Misconceptions About Financial Planning in Business

When it comes to financial planning certain misconceptions are stopping people from making the most use of it. The two most common misconceptions are,

1. Only large organizations are bound to do financial planning. It is not needed for small businesses and organizations.

Financial planning helps you in determining your company goals, be it long or short term. And help you to come up with a plan to meet the goals. So the size of the company does not determine whether you need a financial plan or not. Any company, be it small or large, who is willing to gain profit and succeed, and wants to manage its expenses and cares about the company’s security and its future must have a financial plan. Because a financial plan is not a Want it’s a Need .

2. They are just made-up plans and are a one-time exercise.

A financial plan is not a one-time exercise. Your company will have a standard goal and will work towards it throughout. But sometimes the Government, the tax, the time and the situation around you would not be very kind to you to help you in achieving your goals. So at that time you should make changes to your plan and review it according to the situation.

And sometimes those strategies you have come up with would not have given you the desired result. So you would be bound to review your financial plan and make changes accordingly.

Only then you would be able to meet your company goals.

Importance of a Financial Plan in Business

A financial plan offers numerous benefits to a company. The importance of a financial plan includes:

Learn more about –   Why Does A Business Need Financial Planning? How To Create An Effective Plan That Yields Results

If you are looking for someone to chalk out a perfect financial plan for your company including all the key factors and financial planning KPIs. Then,

Meet the Experts for More Support

MSMEx is an MSME education & advisory platform which helps you connect with industry experts online. At MSMEx , experienced and professional financial advisors help you in all aspects of the enterprise’s financial complications. For expert consultation, contact at www.msmex.in/contact or write us at [email protected]

More Related Read About –

' src=

We are a team of serial entrepreneurs, corporate professionals and business experts, at MSMEx.in


Recent Posts

financial indicators in business plan

Why is the SME IPO so much in demand?

Important links for sme ipo, why is it important to learn new skills in business.


Who are business advisors how to meet them, and how do they help?

business advisors

Tips to hire a business advisor

Business topics.

financial indicators in business plan

Succeed Online With Highly Effective Business Tips and Tricks

Do you want to scale your business even further than it is today? You are at the right place.

We provide Premium Online Learning for Small to Mid-Sized Businesses.

We are MSMEx, an experienced MSME edtech company with highly qualified staff to help companies grow in their industry and attract more visitors online. Whether you are struggling to gain a competitive edge online or are working on bringing your business online, we are here to assist you.

Learn powerful tips and tricks, customized especially for your business to suit its specific needs. All you need is to create a website to get started. We will help you and your employees learn everything about the internet and how things work to bring your business to the limelight.

How MSMEx Sessions Benefit Businesses?

The sessions of MSMEx are beneficial for businesses of all kinds and scales. We help them leverage the power of the world of the internet and also solve all their queries and doubts. You get expert help, if you are ever stuck with the scalability of your business.

You may be doing great online, but it's always better to learn more about things better. Learning experiences provided by us are enjoyable and beneficial at the same time. Grow your business and soar high without limits.

MSMEx will help you connect with your audience, understand their pain points, and earn more revenue than ever you have expected.

If something is working for your competitor, it doesn't need to work for you as well. You very well know that every business is different, and so are its needs. Hence, we work closely with our clients to know and understand their processes and custom-make solutions that work out for them.

Why Learn From MSMEx Experts?

The lessons we provide to businesses are curated to match their needs, preferences, and operations. With years of experience in creating industry experts, we take pride in the services offered. Learning is a never-ending process, and with the world of the internet evolving each passing day, there is an ocean full of things you need to learn.

Discover what you can do for your business by spending half of what you are doing now. Several companies have opted for the sessions provided by our experts, and they have unlocked more significant benefits that were beyond their imagination.

We teach several aspects of business operations and how a business can do a lot more than what it is doing today. We will help you craft the roadmap of your business' success.

Why is MSMEx Different?

We conduct live sessions for businesses to understand the course content in depth. We also allow them to connect with the lecturers in case of doubts. The pillars of our company conduct interactive sessions to give valuable insights.

We also have e-books for business leaders to unlock the full potential of the world of the internet.

Learn from a team of serial entrepreneurs, business experts, and corporate professionals who have made efforts in their journey to success. We teach business owners and other aspirants the tricks to be focused on growth to drive their business forward.

Foundation Stage - Live Master Class - Live business learning

Angel Funding | B2B Sales | Brand Building | Business Loans | Business Model | Business Operations | Business Strategy | Cashflow Management | Daily Operations | Delegation | Digital Tools & Softwares | Finance for Non Finance

Growth Stage - Live Master Class - Live business learning

Export Growth | SME IPO | Money Recovery | Business Automation

PowerSeries TM

Leadership & Producitivity | Pitch Deck & Fundraising | Digital Marketing | Financial Planning | Ideation & Idea Curation | Digital Transformation | Sales Tracking & CRM | Sales Conversions & Closures | Sales Growth | Employee Productivity | Sales Strategy & B2B Sales | Cashflow Management

Premium PowerSeries

Export Growth | SME IPO

Amit Kumar | Charudatta Pande | Cherag Mehta | Dhruv Bajaj | Harish Iyar | Mitakshara Shirgaonkar | Rohit Mittal | Sourav Choudhary

Experts for business growth | Talent Acquisition & Management for SMEs | SME IPO - Funds for small business | Financial Discipline | Pitfalls of GSTR | From struggling business owner to CEO | Business growth beyond Jugaad | Export Market Opportunities | Brand Building & Management for SMEs

MSME Business learning and articals

What is MSME | List of MSME Businesses | List of Govt. Schemes for MSMEs | What is Small Scale Industries? | What is GeM Registration Process? | What is Company Incorporation Procedure? | Importance of Sales in Business | What is Financial Discipline?

Idea Validation: Are You in the Right Business? | Business Maturity Framework | Linkedin Playbook | Making Working Capital Work for You | SME IPO-Raise Funds, Multiply Wealth and Valuation | CX – Your Gateway to become Unicorn | How to Prepare for Sales Meetings | Key Government Schemes | How to Start My Own Business

Absconding Letter | Invoice Listing Tracker | Debit Note Listing Tracker | Credit Note Listing Tracker | Customer/ Sales Invoice Format | Accounts Payable Invoice Tracker | Purchase Register Format | Appointment Letter 2_1

Aplanet - blog


Sustainability indicators: definition, types of KPIs and their use in the sustainability plan 

sustainability indicators and SDG

Sustainability indicators are a must for companies. Over the years, environmental concerns have grown. These organisations have a lot to contribute, especially in reducing their negative externalities. This must be done through their plans and strategies, but it is essential that there is a suitable method of determining how successful these measures have been.

What are sustainability indicators and what are they used for?

These are tools with which the success of a company’s strategies can be measured. These actions are set out in a corporate sustainability plan and are linked to specific targets . For example, reducing the carbon footprint or waste during production. Their implementation is used to assess if progress is being made in the right direction.

The main reason for using these indicators is to determine whether the company is meeting its objectives. In case of a deviation, corrective measures can be introduced. Thus, sustainability indicators evaluate the company’s performance as well as how it carries out its plans. However, it is important that the right parameters be selected and that they be closely linked to the proposed objectives. Otherwise, they will become largely ineffective.

Sustainability indicators are also closely linked to different standards. Such standards are voluntary and cover a wide range of subjects, including environmental, social or ethical safety. By adopting them, companies demonstrate their commitment and performance in specific areas , as well as having a framework to guide their actions. Today, there are more than 500 different standards, one of them being the financial disclosure recommendations of the TCFD (Task Force on Climate-related Financial Disclosures) from the Financial Stability Board.

What are the indicators that measure corporate sustainability?

Sustainability indicators are grouped into three main categories. Each refers to a specific set of objectives, such as environmental, social and governance. It is in these areas where companies’ strategies and plans will have an impact. By becoming familiar with them and looking at some examples, it will be easier to understand what they have to offer.

Environmental sustainability indicators

They evaluate the success of measures taken in minimising negative externalities on the environment. Such externalities are a consequence of business activity , which is by no means harmless. Manufacturing, especially in industry, requires consumption of resources and energy, which damages the environment through waste generation and, thus, pollution.

Environmental sustainability indicators focus on measuring the mediation of these externalities. Some examples include:

Social sustainability indicators

Social indicators measure how the company interacts with its local community and society as a whole . As with the environmental externalities, these organisations have the ability to affect large groups of people, including employees, customers, suppliers or shareholders. The decisions taken by management can impact these groups directly or indirectly.

Therefore, companies must develop an ethical approach to business and take into account how they manage their human resources. This translates to adequate salaries, healthy work environments and the absence of individual employee discrimination. Ultimately, it is critical to remember the importance of the social aspect of ESG and neglecting it will only lead to poor results. Here are some useful indicators:

Sustainability indicators for governance

Governance sustainability indicators focus on economic and financial aspects. The organisation has to be profitable in order to balance its operations. To achieve this, the company must follow rational and risk-reducing governance criteria. A bad decision, such as acquiring a deficient business, can lead to bankruptcy.

Furthermore, there must be counterweights within the organisation to limit the managerial power. At the same time, the role of adequate governance criteria must be emphasised in order to develop a corporate culture rooted in sustainability and transparency. The indicators include:

What is a corporate sustainability plan?

A corporate sustainability plan outlines the strategy that the organisation will follow. It defines the objectives to be pursued at different points in time. Some will be achieved in the short term, but others will only be achievable in the long term. In addition, each goal will be developed through a series of actions, which must also be defined.

Naturally, the objectives will be aligned along three main axes: environmental, social and governance. In this way, the main areas of action are covered. Furthermore, several phases for the implementation of the plan will be established, along with an implementation period. It will be communicated to all participants and decision-makers in good time, allowing them to prepare for their tasks and to avoid mistakes that could hamper implementation.

In conjunction with this, the plan must be realistic in order to be useful and effective. If you do not have this in mind, you will be creating a document that will only be a statement of intent. It will have no value and will not lead the organisation to achieve any objectives. It is essential to avoid this type of behaviour that leads to symbolic and irrelevant actions.

How a corporate sustainability plan can be made

When designing a sustainability plan, it is essential to follow a series of steps. These steps will allow the creation of a solid document , which will be adapted to the company’s situation. Each company has to develop its own plan according to its needs, ensuring that the impacts generated are positive and significant in all areas.

Sustainability indicators

The first step is to establish sustainability indicators , which will be based on a materiality analysis , a process that helps the company determine which areas to focus on. This leads the company to prioritise between objectives, while taking into account stakeholder concerns, providing a solid foundation to cover the rest of the steps.

financial indicators in business plan

Define sustainable objectives

Objectives are the fundamental part of any plan as they encapsulate what you want to achieve . Each goal must be attainable, measurable, specific, relevant and time-bound. By following this guideline, you avoid forming goals that are too vague, general or unrealistic. This would only lead to a poorly designed plan that would not be very practical.

Moreover, without clear and easy-to-understand objectives, those in charge may not know how to proceed. They would carry out their tasks without conviction, doubting whether they are doing the right thing. It is therefore advisable to take sufficient time defining appropriate goals.

Defining sustainable measures

Each objective is broken down into a series of specific actions organised according to priority . This pattern helps to avoid actions overlapping or interfering with each other. However, it is important not to create too many actions or to divide them into sub-actions. The more complexity that is added, the weaker the results will be. Therefore, the plan needs to be coherent for all participants and stakeholders.

In addition, the actions should be tied to a specific time period, which will prevent them from taking too long, motivating those responsible to act diligently. A budget will be allocated for compliance and any other resources required. Ideally, this should be kept as tight as possible to avoid unnecessary spending, which would reduce their sustainability.

Establishing follow-up procedures

Finally, the plan needs an established process to track its performance. It aims to evaluate the progress of measures taken within the plan. It also ensures that the budget is not surpassed or that the allocated resources are not exceeded. It helps to anticipate problems, visualise progress and correct deviations.

The monitoring process requires regular reporting of results, enabling managers to make decisions in real time. Moreover, by reporting every few months, it will be possible to check the plan’s evolution. Sustainability indicators will be taken into account as they help to check whether the objectives are being met.

Follow-up meetings involving stakeholders and decision-makers will also be planned. Their role is to provide feedback on the interim results of the plan and the views of the participants. In this way, information on progress will continue to flow.

In conclusion, sustainability indicators are vital for creating a robust plan. Otherwise, it is difficult to make sure you are moving in the right direction and your targets are being met. Therefore, the indicators ensure that the company’s actions generate the positive impacts that were expected, benefiting society as a whole. Do you want to make this process a success? Get in touch with us.

Subscribe to our resource hub to keep up to date with the latest trends in the sector

' src=

- Will you write my paper for me? - Yes, we will.

What we offer:, let’s write a paper for you in no time, follow these 4 simple steps and solve you problem at once.

Provide details such as your topic, the number of pages, and extra requirements, and we’ll do a paper for you in no time!

Log in to your personal account to know the current status of your paper(s). You can also turn to our support team for the same purpose. Enjoy your life while we're working on your order.

As soon as we write the paper(s) for you, check it for correctness, and if everything is good to go, just download it and enjoy the results.

Our customers’ feedback

Still hesitant just look: others have already used our services and were pleased with the results.

Thank you guys for the amazing work! I got an A, and my professor was impressed. You have done the impossible, and I will never forget your help! The best service ever!

I ordered my paper two weeks ago and received it on time. The quality is very good, much better than other companies provide. My support agent is a pro, fast and simple explanations. Thanks!

I am firmly convinced that you will never disappoint me because you haven’t done it before. Amazing approaches and solutions at perfect prices! Please continue working the way you do!

I’ve been using WritePaperFor.me for about five months, and I have nothing to complain about. Excellent quality, perfect grammar, delivery on time, nice support team, pleasant prices, amazing results.

This service helped me focus on my job, and I will never forget the support I received. I’ve got a promotion in the end! Thanks a lot for everything you do for people like me!

I have to admit that searching for a reliable and professional service was a tough quest. Nevertheless, I am happy that I managed to find writepaperforme! Everything is much better than I expected!

The best bargain is just a few clicks away!

Get an original paper that doesn’t cost a fortune!

​​Still have questions?

Contact our support agents and let them help you!

Is it time to write a paper for you? Contact us and relish the highest academic performance! 

Our professionals will do their best!

You’ll write my paper for me, won’t you? We certainly will!

So tired of writing papers that you’re starting to think of your professor’s demise? Relax, we’re only joking! However, even a joke is woven with the thread of truth, and the truth is that endless assignments are constantly nagging at you and keeping you up all night long.

‘Writing my papers is unbearable!’ you may think But you’re not alone… What if we told you that we know a magical place where professionals can write your essays so perfectly that even professors’ most sophisticated requirements will be met? You’ve probably already guessed that we’re talking about WritePaperFor.me — the most delightful, facilitating, and destressing custom paper-writing service!

We are not going to be shy about our wish to see you as our steady customer. As a result, we aren’t twiddling our thumbs but permanently improving our services; we carefully select writers who always bone up on their subjects and disciplines, and we won’t rest unless you’ve gotten your ideal paper(s). All your wishes become our unshakable rules!

Why would I ask you to write paper for me?

Despite the obvious and even natural resistance to the idea of paper writing in principle that may occur with any student, you may also ask yourself, ‘Why would I need you to help me write my paper?’ The answer to this question lies in the spectrum of your routine actions. It’s not surprising that studying becomes part of our lives, but sometimes we’ve just got too much going on!

When you write an essay or academic paper, you just do one of the numerous things you face daily or weekly. This part of your life consumes lots of energy and time, so how can you possibly get around to doing other things like having fun, working, playing sports, helping relatives, and spending time with friends?

People are social creatures, and it’s only natural of us to request help from experts.. That’s why we ask doctors, electricians, or plumbers to help us! They’re all specialists. Who writes essays for you better than you do? Right, people who write numerous essays every day. We are experts in academic writing, aimed at satisfying all your needs related to education.

You just hire a professional to get a paper written, like you normally do in other situations. Our team of writers know everything about writing your paper and can cope with assignments of any complexity and academic level. Well-researched and expertly-written papers are what we do for our customers, and we always do our work professionally so that you could kick back and enjoy your life to the fullest.

The undeniable benefits of our custom paper-writing service

Apart from a paper written in accordance with the highest standards, we provide a wide range of contributory advantages to make your life easier. Let’s take a closer look at them.

Round-the-Clock Support. Our paper-writing service works day and night to help you with all current issues. Our friendly support team is available whenever you need them, even if it’s the middle of the night. They will gladly guide you and answer all your questions on how to order customized papers or consult you about the matters at hand. Feel free to share your questions or concerns with them and get comprehensible answers.

High-Class Quality. ‘Will you write a paper for me that meets all requirements?’ This question is frequently asked by many students, and we always answer in the affirmative. Our main goal is to deliver a perfectly written paper the meets the highest possible writing standards. We don’t rest unless you are satisfied with our work. If you hire a paper writer online, we guarantee you that you get 100% original and plagiarism-free assignments of high quality.

Complete Anonymity. We value your privacy and use modern encryption systems to protect you online. We don’t collect any personal or payment details and provide all our customers with 100% anonymity. ‘Can you write a paper for me and let me stay anonymous?’ Of course, we can! We are here to help you, not to cause problems.

Fast Delivery. We completely understand how strict deadlines may be when it comes to writing your paper. Even if your paper is due tomorrow morning, you can always rely on us. Our writers meet all set deadlines unequivocally. This rule is ironclad! The offered range is wide and starts from 6 hours to 2 weeks. Which one to choose is totally up to you. On our part, we guarantee that our writers will deliver your order on time.

Free Revisions. Our mission is to hone your paper to perfection. That’s why we offer you free revisions to make everything ideal and according to your needs. Feel free to ask for revisions if there is something you would like to be changed. That’s how our paper writing service works.

Money-Back Guarantee. You can get up to a 100% refund if you are dissatisfied with our work. Nevertheless, we are completely sure of our writers’ professionalism and credibility that offer you hard-core loyalty to our guarantees.

Comprehensible Explanations. ‘Can someone write my paper for me and provide clarifications?’ This question arises from time to time. Naturally, we want you to be totally prepared for the upcoming battle with your professor. If you need to fill the gaps in your knowledge, you can always ask for clarifications related to your paper. Moreover, when you order ‘write my paper for me’ service, you can always turn to our support agents for assistance. They will be glad to provide you with the necessary information and comprehensible explanations.

Fast and Customer-Focused Solutions. ‘Is it possible to do my paper for me so that I don’t worry about it at all?’ It certainly is! We offer all-encompassing solutions to all your academic problems by defining issues, determining their causes, selecting proper alternatives, and ultimately solving them. You are free to do your favorite activities while we are taking care of ongoing matters. You can always rely on us when it comes to essay-writing online and taking an individual approach to every case.

Who will write my paper when I order it?

Another crucial advantage of our service is our writers. You may have asked yourself, ‘I’d like to pay someone to write a paper for me, but who exactly will that person be?’ Once you order a paper, our managers will choose the best writer based on your requirements. You’ll get a writer who is a true expert in the relevant subject, and a perfect fit is certain to be found due to our thorough procedure of selecting.

Every applicant passes a complex procedure of tests to become one of our permanent writers. First of all, they should provide their credentials.  We need to make sure that any prospective writers we hire have the proper experience.. The next step resides in passing a series of tests related to grammar, in addition to subject and/or discipline. Every paper-writer must pass them to prove their competency and their selected field of expertise.

One more step includes writing a sample to prove the ability to research and write consistently. Moreover, we always set our heart on hiring only devoted writers. When you ask us to write your essay or other academic works, you can be sure that they always do their best to provide you with well-structured and properly-written papers of high quality.

The final chord is related to special aspects of academic paper-writing. It means that every writer is prepared to cite properly, use different styles, and so on, so you don’t have to be worried about formatting at all.

‘So, can they write an ideal paper for me?’ We answer in the affirmative because we select only the best writers for our customers. Approximately 11% of all applicants can pass the whole set of tests and are ready to help you. All writers are fully compensated for their work and are highly motivated to provide you with the best results.

We are online 24/7 so that you could monitor the process of paper-writing and contact us whenever necessary. Don’t forget that your satisfaction is our priority. Our writers fully focus on your order when it comes to the ‘write my paper’ procedure. Our managers will immediately send all the information to your writer if any corrections are required.

It’s time to write my paper! What should I do?

‘I am ready to pay to have a paper written! Where do I start?’ Our team hears these words every day. We really believe that every student should be happy. That’s why we offer you to look at the simple steps to make the process even more convenient.

Every paper we can write for you is expertly-researched, well-structured, and consistent. Take a look at some types of papers we can help you with:

Questions like ‘I would like you to write a paper for me without destroying my reputation. Can you promise to do so?’ or ‘Can you write my paper for me cheap and fast?’ often arise, and we take pride that these options are included in the list. Your safety and anonymity are parts of our common priority, which is to make you fully satisfied with all offered services.

Moreover, our pricing policy is flexible and allows you to select the options that totally suit your needs at affordable prices. You will be pleased with the results and the amount of money spent on your order. Our managers and writers will do the rest according to the highest standards.

Don’t hesitate and hire a writer to work on your paper now!

We believe that students know what is best for them, and if you suppose that it is time to ‘write my paper right now,’ we will help you handle it. ‘Will you do my paper without any hesitation?’ Of course, we will. Our service has all the necessary prerequisites to complete assignments regardless of their difficulty, academic level, or the number of pages. We choose a writer who has vast experience and a breadth of knowledge related to your topic.

Our ‘write my paper for me’ service offers a wide range of extra features to make the ordering process even more pleasant and convenient. Unlike lots of other services, we provide formatting, bibliography, amendments, and a title page for free.

‘When you write my paper for me? Can I monitor the process?’ Naturally, you can. We understand that you may want to ensure that everything is going well. Furthermore, there may be situations when some corrections are needed. We believe that a tool like this can come in handy. The assigned writer will strictly follow your and your professor’s requirements to make sure that your paper is perfect.

‘Is it possible to write my essay from scratch?’ We don’t do just proofreading or editing. Our goal is to fully carry your burden of writing. When this or similar questions appear, we always assure our customers that our writers can do whatever they need. Apart from writing from scratch or editing and proofreading, our experts can effortlessly cope with problem-solving of all kinds;even sophisticated software assignments!

Our ‘write my paper for me’ service is good for everyone who wants to delegate paper-writing to professionals and save precious time that can be spent differently and in a more practical way. We want you to be happy by offering the great opportunity to forget about endless and boring assignments once and forever. You won’t miss anything if your papers become the concern of our professional writers.

Don’t waste your precious time browsing other services. We provide you with everything you need while you are enjoying yourself by doing things you really enjoy. ‘Write my paper then! Do my paper for me right now!’ If you are ready to exclaim these words with delight, we welcome you to our haven, a place where students spend their time serenely and never worry about papers! It’s your turn to have fun, whereas our mission is to provide you with the best papers delivered on time!

Questions our customers ask

Can someone write my paper for me.

Yes, we can. We have writers ready to cope with papers of any complexity. Just contact our specialists and let us help you.

Who can I pay to write a paper for me?

We will help you select a writer according to your needs. As soon as you hire our specialist, you’ll see a significant improvement in your grades.

Can I pay someone to write a paper for me?

Yes, you can. We have lots of professionals to choose from. We employ only well-qualified experts with vast experience in academic paper writing.

What website will write a paper for me?

WritePaperFor.me is the website you need. We offer a wide range of services to cover all your needs. Just place an order and provide instructions, and we will write a perfect paper for you.

Is it safe to use your paper writing service?

Our service is completely safe and anonymous. We don’t keep your personal and payment details and use the latest encryption systems to protect you.

What are you waiting for?

You are a couple of clicks away from tranquility at an affordable price!


  1. Key Financial Indicators -- Your Business's EKG

    financial indicators in business plan

  2. Financial indicators and trends

    financial indicators in business plan

  3. PPT

    financial indicators in business plan

  4. Financial indicators

    financial indicators in business plan

  5. Financial indicators and trends

    financial indicators in business plan

  6. PPT

    financial indicators in business plan


  1. Managerial Finance: Financial Markets, pt 2

  2. Financial Markets and Business Organizations

  3. Managerial Finance: Financial Markets, pt 3

  4. Making Profit $2000 With Easy Strategy


  6. Indicators of Financial Development


  1. Key Financial Indicators for Business

    There are two general financial indicatorsin the liquidity ratio: quick ratio and current ratio. These are some essential financial indicators of a business, giving an excellent insight into the market. Another thing necessary for the business is the sales of the company. There are some critical sales things to be checked out for the business.

  2. The 9 Most Important Financial Key Performance Indicators For Your Business

    Your solvency ratio is an essential financial key performance indicator of your business maturity and sustainability that you simply can't ignore! 5. Working Capital Your working capital calculation is similar to solvency because it uses assets and liabilities to depict the health of your balance sheet.

  3. Key Financial Performance Indicators for better business financial and

    Here are the indicators to assess financial performance in various areas of your organization Gross profit margin This factor tells you whether the price of your product/goods is fundamentally right or not. Gross profit margin is basically the overall profit you gain without covering up all the fixed operations costs.

  4. 5 financial indicators every entrepreneur should monitor

    Henao says key financial indicators fall into these categories: Growth —Are your sales and profits increasing or decreasing year-over-year? Is there a trend? Profitability —Is your business making enough profit compared to other similar companies? Liquidity —Can the company meet its short-term obligations?

  5. 30 Financial Metrics and KPIs to Measure Success in 2021

    Financial key performance indicators (KPIs) are select metrics that help managers and financial specialists analyze the business and measure progress toward strategic goals. A wide variety of financial KPIs are used by different businesses to help monitor their success and drive growth.

  6. 12 Key Financial Performance Indicators You Should Be Tracking

    Finance Department — Operational KPIs should also include obscure indicators such as Finance Error Report KPI, Payment Error Rate KPI. And, a variety of indicators in areas of billing and transaction management, collections, and others. KPI failures can occur due to any one of a number of reasons:

  7. 13 Financial Performance Measures Managers Should Monitor

    Financial KPIs (key performance indicators) are metrics organizations use to track, measure, and analyze the financial health of the company. These financial KPIs fall under a variety of categories, including profitability, liquidity, solvency, efficiency, and valuation.

  8. Business Plan Financial Templates

    Key Financial Indicators and Ratios: In this section, highlight key financial indicators and ratios extracted from financial statements that bankers, analysts, and investors can use to evaluate the financial health and position of your business. Need help putting together the rest of your business plan?

  9. Eight financial KPIs to help measure your business performance

    Financial KPIs measure business performance against specific financial goals such as revenue or profit. They show the financial health of a business against internal benchmarks, competitors, and even other industries. Financial KPIs are widely used in strategic planning and reporting to help people decide where to focus their investment.

  10. The 5 Most Important Financial KPIs That Drive Business Strategy

    Performance Indicators Simply put, if your net profit margin is positive, you're generating profit. You can either keep doing what you're doing or adjust your strategy to increase your profitability. On the flip side, if your net profit margin is negative, you know your business is losing money.

  11. Financial Indicators That Every Business Should Know

    Smart business decisions rely on effective financial management. Identifying problems and initiating corrective action is important to maximize shareholder wealth and ensure sustainability. Financial indicators allow you to understand the overall health of your business and meet these objectives.

  12. Your Top Six Financial Indicators

    If you're a CEO or business owner, we recommend your dashboards include these key indicators: KPI #1: Net Profit Margin Divide net profit by net sales and you'll have the number that reveals the efficiency with which your company converts its revenue into profits.

  13. Business Plan 2023

    This 2023 business plan clearly states our priorities and ambition for the year ahead, helping industry and our wider stakeholder community to understand our focus. Our Strategic Framework 2021-2024 outlines our vision to be a 'high-performing regulator, building for the long-term success of Jersey'. As we embark on the second year of our ...

  14. Get Your Company's Financial Ratios KPI In A Business Plan

    Key Performance Indicators KPI and Ratios in a Business Plan The Enloop online business plan software provides you with a breakdown of 25 financial ratios, also known as Key Performance Indicators (or KPI) for your company, based on how you forecast your financial performance.

  15. 5 Best Indicators of Business Growth

    Here are five top indications of business growth : 1. Inventory is running out High inventory turnover is a sign that your products are in demand. If you have to replace items at a rapid rate, you may be landing more sales and expanding your customer base. To calculate your inventory turnover ratio, use the following formula:

  16. 11 Important Financial KPIs For Your Business

    This financial indicator measures your company's total revenue per the number of your current employees. It basically tells you how much money is generated from each employee. The formula for this indicator is simple and is calculated by the following: Revenue Per Employee = Revenue/# of employees.

  17. 27 Examples of Key Performance Indicators

    Key Performance Indicators (KPIs) are the elements of your plan that express what you want to achieve by when. They are the quantifiable, outcome-based statements you'll use to measure if you're on track to meet your goals or objectives. Good plans use 5-7 KPIs to manage and track the progress of their plan.

  18. Key Performance Indicator (KPI) Metrics For Financial Advisors

    Building a financial dashboard of "Key Performance Indicators" (KPIs) that track key metrics of the business, its growth, and its clientele, can give you the information you need to make better practice management decisions. It's not necessarily about harnessing the "big data" insights of an entire industry, but simply the "small data ...

  19. Financial Planning KPIs, Misconceptions & Importance in Business

    The two most common misconceptions are, 1. Only large organizations are bound to do financial planning. It is not needed for small businesses and organizations. Financial planning helps you in determining your company goals, be it long or short term. And help you to come up with a plan to meet the goals.

  20. Sustainability indicators: definition, types of KPIs and their use in

    Each company has to develop its own plan according to its needs, ensuring that the impacts generated are positive and significant in all areas. Sustainability indicators. The first step is to establish sustainability indicators, which will be based on a materiality analysis, a process that helps the company determine which areas to focus on ...

  21. Business Plan Key Financial Indicators

    Business Plan Key Financial Indicators, Cultural Sensitivity In Nursing Essays, How To Write Vector In Latex, Essays On Why You Want To Be A Doctor, Essays Mla Format Quotes, Academic Essay Writer, Resume Business Process Analyst 4.8/5 ...