Accounting tools are the best key performance indicators to
measure and track company performance. KPI always provide a clear view of your
business. This KPI also helps in finding the underperforming area to
prevent the loss. Here we discuss some of the financial performance indicators.
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Some of the Financial Performance Indicators
- Operating Cash Flow
- Working Capital
- Current Ratio
- Debt to Equity Ratio
- LOB Revenue Vs. Target
- LOB Expenses Vs. Budget
- Accounts Payable Turnover
- Accounts Receivable Turnover
- Inventory Turnover
- Return on Equity
- Quick Ratio
- Customer Satisfaction
From the above list, we will discuss a few of them briefly.
Operating Cash Flow
To know about your routine operating expenses, you have to
track and analyze your operating cash flow. Through this process, you can able
to compare the operating cash flow with a total capital.
Working Capital
Working capital is immediately available cash. Working
capital can be calculated as
Working Capital = Existing Assets – Business’s existing
liabilities.
KPI Equation consists of accounts payable, accounts
receivable, short term investment, Cash on hand, etc.
Current Ratio
Current Ratio calculated as Total Assets/ liabilities
Through the current ratio, you can able to understand the
solvency of the business. To improve
your business growth you have to maintain the credit rating level. For
this purpose, you have to calculate your business current ratio.
Debt to Equity Ratio
Debt to Equity is one of the major critical KPI. This
KPI helps you to focus on financial accountability. Based on the KPI you can
able to analyze whether you are using the shareholder’s investments for
business growth.
Account Payable Turnover
Account payable turnover rates are calculated based on how
business owners pay off suppliers. Account payable turn over can be calculated
as total costs of sales during a period divided by average accounts payable for
that period.
Account Receivable Turnover
Accounting receivable turnover rate is calculated based on
how business owner collecting the payments dues from the clients. Account
receivable turnover is calculated as Total Sales for a Period divided by
average accounts receivable for that period.
Inventory Turnover
Inventory turnover rate is calculated based on how much inventory
items sold within a particular period. Inventory turnover is calculated as
Sales within a particular period divided by average inventory in that
particular period.
Based on the inventory turnover KPI you can able to view the
productivity and company sales strength.
These are the few financial performance indicators. To learn
more about the accounting
software you can reach us at accounting software support
number + 65 6227 1797 / +65 6746 2613 or Email us sales@onestopaccounting.com
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