Profitability KPIs

– Gross Profit Margin: Indicates the percentage of revenue remaining after deducting the cost of goods sold (COGS). Formula ( text{Gross Profit Margin} = left( frac{text{Revenue} – text{COGS}}{text{Revenue}} right) times 100 ).
– Operating Profit Margin: Measures the profitability of core operations before interest and taxes. Formula ( text{Operating Profit Margin} = left( frac{text{Operating Profit}}{text{Revenue}} right) times 100 ).
– Net Profit Margin: Shows the percentage of revenue that translates into profit after all expenses, including taxes. Formula ( text{Net Profit Margin} = left( frac{text{Net Profit}}{text{Revenue}} right) times 100 ).

Efficiency KPIs

– Asset Turnover Ratio: Indicates how efficiently assets are used to generate revenue. Formula ( text{Asset Turnover Ratio} = frac{text{Revenue}}{text{Average Total Assets}} ).
– Inventory Turnover Ratio: Measures how many times inventory is sold and replaced over a period. Formula ( text{Inventory Turnover Ratio} = frac{text{Cost of Goods Sold}}{text{Average Inventory}} ).
– Accounts Receivable Turnover Ratio: Shows how efficiently receivables are collected. Formula ( text{Accounts Receivable Turnover Ratio} = frac{text{Net Credit Sales}}{text{Average Accounts Receivable}} ).

Liquidity KPIs

– Current Ratio: Measures the ability to pay short-term obligations with short-term assets. Formula ( text{Current Ratio} = frac{text{Current Assets}}{text{Current Liabilities}} ).
– Quick Ratio (Acid Test Ratio): Assesses immediate liquidity without inventory. Formula ( text{Quick Ratio} = frac{text{Current Assets} – text{Inventory}}{text{Current Liabilities}} ).

Solvency KPIs

– Debt-to-Equity Ratio: Evaluates the proportion of debt relative to equity. Formula ( text{Debt-to-Equity Ratio} = frac{text{Total Debt}}{text{Total Equity}} ).
– Interest Coverage Ratio: Measures the ability to pay interest expenses with operating income. Formula ( text{Interest Coverage Ratio} = frac{text{Operating Income}}{text{Interest Expense}} ).

Return on Investment (ROI) KPIs

– Return on Assets (ROA): Shows how effectively assets are used to generate profit. Formula ( text{ROA} = frac{text{Net Income}}{text{Average Total Assets}} ).
– Return on Equity (ROE): Measures the return generated on shareholders’ equity. Formula ( text{ROE} = frac{text{Net Income}}{text{Average Total Equity}} ).

Cash Flow KPIs

– Operating Cash Flow Ratio: Indicates the ability to generate cash from core operations. Formula ( text{Operating Cash Flow Ratio} = frac{text{Operating Cash Flow}}{text{Total Revenue}} ).
– Free Cash Flow: Measures the cash available after expenditures to fund growth opportunities or return to shareholders. Formula ( text{Free Cash Flow} = text{Operating Cash Flow} – text{Capital Expenditures} ).

Profitability Metrics

– Contribution Margin: Evaluate how much revenue remains after covering variable costs and how it contributes to covering fixed costs.

Growth Metrics

– Revenue Growth Rate: Measure the increase or decrease in revenue over a specified period. Formula ( text{Revenue Growth Rate} = left( frac{text{Current Revenue} – text{Previous Revenue}}{text{Previous Revenue}} right) times 100 ).

Cost Management Metrics

– Cost-to-Revenue Ratio: Evaluate how effectively costs are managed relative to revenue generation.

Customer and Market Metrics

– Market Share: Assess the unit’s share of the market compared to competitors.