Why are KPIs important?
An objective metric called a KPI (key performance indicator) can be used
to assess how successfully business objectives are being achieved.
They give you the knowledge necessary to comprehend the performance and overall health
of your company,
allowing you to make the necessary changes to your execution to meet your strategic
objectives.
What does ProudNumbers offer?
ProudNumbers offer following KPIs:
-
Total Sales (month)
-
Sales Growth on prior month%
-
Gross Profit
-
Gross Profit as % of Turnover
- Net Profit
- Net Profit as % of Turnover
- Quick Ratio
- Current Ratio
- Debtor Days
- Creditor Days
- Stock Days
- Working Capital
Total Sales (month) % & Sales Growth on prior month%.
It enables you to recognise sales periodicity and identify fluctuations, as well as how
marketing campaigns and efforts affect your sales.
Gross Profit; Gross Profit as % Turnover; Net Profit & Net Profit as % of Turnover
These four metrics show how effective a management team is in generating money,
considering the expenses associated with producing their goods and services.
The gross profit is the absolute GBP amount of revenue that a company generates
beyond its direct production costs. Gross Profit as % of Turnover shows the
percentage of revenue that exceeds the cost of goods sold.
Knowing your company's gross profit might help you come up with ideas for how to
lower your cost of goods sold or raise prices for your products.
Gross Profit
Gross Profit is your business’s revenue minus the cost of goods sold.
Your cost of goods sold is how much money you spend directly making your products. But
your business’s other expenses are not included in your cost of goods sold. Gross profit
is your company’s profit before subtracting expenses.
Net Profit
Net Profit is the revenue of your company after deducting all
operating expenditures and your cost of goods sold. You need to know your company's gross
profit to determine net profit.
You can identify expense reductions if your net profit is significantly less than your
gross profit.
And if your net profit is significantly lower than your gross profit, you can determine
expense cuts.
Overhead Ratio
An overhead ratio is a measurement of the operating costs of doing business compared to the
company's income. A low overhead ratio indicates that a company is minimizing business
expenses that are not directly related to production.
Quick Ratio
The quick ratio, measures the ability of a company to pay all of its outstanding liabilities
when they come due with only assets that can be quickly converted to cash
The company's liquidity rises as the quick ratio does. If necessary, more assets can be
quickly turned into cash. This is a good sign for investors and an even better sign for
creditors, as it assures them that they will be repaid on time.
A very high ratio isn't always a good thing, though. It might imply that money has
accumulated but isn't being invested, returned to investors, or used in any other useful
ways.
Current Ratio
The current ratio is a liquidity ratio that measures a company's ability to pay short-term
obligations or those that are due within one year.
The current ratio is used to measure a company’s ability to pay off short-term debt.
The current ratio, as opposed to the quick ratio, considers all assets, including
inventory held by the company, which is more difficult to convert to cash during that
fiscal year.
Debtor Days
Debtor days is the average number of days taken for a business to collect a payment from its
customers. The longer an invoice is paid past the due date, the more detrimental it is to a
company's cash flow.
Creditor Days
Creditor Days show the average number of days your business takes to pay suppliers.
If the days ratio is trending lower than the standard terms of trade, this may be a sign
that suppliers are being paid too quickly, which lowers the amount of cash available to
the company, or it may be because suppliers are receiving early settlement
discounts.
Stock Days
Stock Days is the number of days on average that a business holds its stock.
It is significant because a company frequently has a sizeable sum of money invested in
its stock. Financial issues can arise from having an excessive amount of the incorrect
inventory items.
Working Capital
The working capital formula tells us the short-term liquid assets remaining after short-term
liabilities have been paid off.
You run the risk of running out of money if your working capital falls too low.