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. Continue Reading…
Some of the Financial Performance Indicators
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 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 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 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 email@example.com