## Table of Content

- List of financial metrics and calculators
- Gross Profit
- Net Profit Ratio
- Cost to Sales Ratio
- Budgeted Revenue Versus Actual Revenue
- COGS
- Days Sales Outstanding (DSO)
- Budgeted Cost vs Actual Cost
- Revenue Growth Rate
- Accounts Receivable Turnover
- Inventory Turnover
- Cost of Workforce Percentage
- Quick Ratio/Acid Test
- Price to Earnings Ratio (P/E)
- Debt to Equity Ratio
- Bad Debt
- Return on Equity (ROE)
- ROA (Return On Assets)
- Average Annual Sales Value Per Customer
- Accounts Payable Turnover

Financial performance is of pivotal concern for every business given the imperativeness of metrics like revenue, profitability, expenditures and so on. Having said that, effective tracking of businesses strategies directly impacting financial stability and growth becomes quintessential. For that, businesses should pay great heed to the following KPIs and calculators.

## List of financial metrics and calculators

## 1. Gross Profit

Gross Profit is what ultimately matters the most to any business as it should. The gross profit of a given enterprise is the quantifiable value of its total sales excluding the cost of the goods or services sold. Here it is noteworthy that the cost of goods sold is the summation of all the variable costs included in sales including the manufacturing and selling costs.

**Gross Profit as a KPI**

Companies can set up the gross profit margin ratio as a KPI, for example, if a company wants to reduce production waste, the KPI could be to increase the gross profit ratio by a certain percentage.

**How to calculate the gross profit margin ratio?**

The gross profit percentage is yielded by the formula-

Gross Profit | x 100 |

Sales |

**Example**

Sales 2500

Cost of Goods Sold - 1850

Gross Profit Margin = (2500-1850)/2500*100 = 26%

**Gross Profit Calculator**

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## 2. Net Profit Ratio

The net profit or net income of an enterprise depicts the income of a company after all its expenditures have been settled from its revenue. Net profit is the net amount left after paying off all the expenses, interest payments and taxes. Net profit is the net amount that can be attributable to the equity holders of the company.

**Net Profit Ratio as a KPI**

A company can set the net profit ratio as a KPI for various objectives, for example, a company has an objective to reduce the overall costs for the company and a good KPI would be to increase the Net profit ratio.

**How to calculate net profit Ratio?**

The net profit ratio is calculated by the formula-

Net Profit | x 100 |

Sales |

**Example**

Net Profit After Tax - 400

Sales - 1200

Net Profit Ratio = (400/1200)*100 = 33.33%

**Net Profit Ratio Calculator**

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## 3. Cost to Sales Ratio

This key performance indicator is a measure of the overall costs incurred by an enterprise in a fiscal year or a given period of time. This cost is inclusive of the manufacturing costs, operational costs, transactional costs, advertisement costs, interest costs, incentives, and all other costs held by a business. The computation of total costs incurred by a company as a percentage of its sales yields a key determinant of its financial performance.

**Cost to Sales Ratio as a KPI**

Cost factor could be a KPI for numerous business objectives like bringing operational efficiency, human resource efficiency, marketing efficiency etcetera. For example, if a company plans to reduce its operational costs, this KPI could be of great relevance and importance.

**How to calculate net profit Ratio?**

The net profit ratio is calculated by the formula-

Total Costs | x 100 |

Sales |

**Example**

Total Costs- USD 150,000

Total Sales- USD 500,000

The Ratio of Total Costs and Sales- 30 Percent.

**Cost to Sales Ratio Calculator**

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## 4. Budgeted Revenue Versus Actual Revenue

This KPI is a measure of the variance between an organization’s budgeted (planned) revenue and the actual revenue generated in a given time period. This variance gives an organization a clear idea of the success of its revenue growth strategy and tactics.

**Budgeted Revenue Versus Actual Revenue as a KPI**

Budgeted revenue versus actual revenue could be a KPI for business objectives like sales objectives, key marketing objectives, and other objectives linked to sales or revenue of the company. budgeted revenue vs actual revenue provides the variance and hence helps the company to monitor the expenses according to the variance.

**How to calculate budgeted revenue vs actual revenue?**

The measure of this variance is calculated using the formula-

Actual Revenue - Budgeted Revenue | x 100 |

Budgeted Revenue |

**Example**

Budgeted Revenue- USD 650,000

Actual Revenue- USD 657,000

Budgeted Revenue vs Actual Revenue - 1.07 which means that the company revenue has outperformed the budgeted revenue by 7%

**Budgeted Revenue Versus Actual Revenue Calculator**

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## 5. COGS

As mentioned above, COGS stands for the cost of goods sold by a business. It refers to the direct expenses incurred by a business for producing goods. It is inclusive of the direct costs of materials used in the production as well as the wages of the labor.

**COGS as a KPI**

Percentage of COGS could be a KPI for a number of business objectives like increasing labor efficiency, bringing direct cost - raw material efficiency, bringing inward logistics efficiency, and others related to reducing the direct cost to sales. For instance, if a company is planning on bringing inventory efficiency by choosing between producing in-house or outsourcing then COGS could be a good KPI.

**How to calculate the percentage of COGS?**

The percentage of the cost of goods sold can be conveniently calculated using the formula-

Cost of Goods Sold | x 100 |

Sales |

**Example**

Cost of Goods Sold- USD 25000

Total Sales- USD 85000

Percentage of COGS- 29.41 percent

**COGS Calculator**

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## 6. Days Sales Outstanding (DSO)

Days Sales Outstanding is a statistical measure of the average number of days in which a business receives the payment for a particular sale. In the usual context, Days Sales Outstanding is measured on a monthly, quarterly, and year-on-year basis. For obvious reasons, companies would want the value of DSO to be as low as possible.

**Days Sales Outstanding as a KPI**

DSO can be a KPI for a number of business objectives such as increasing cash turnover, bringing efficiency in collections, and other objectives related to collections from debtors. When a company wants to increase efficiency in debt collection and take decisions such as outsourcing debt collection to a third party then Days Sales Outstanding (DSO) would be a relevant KPI.

**How to calculate Days Sales Outstanding?**

The value of DSO can be computed using the formula-

Accounts Receivable | x Number of Days |

Total Credit Sales |

**Example**

Revenue in 2020- USD 3 million

Credit Sales- USD 2 million

Cash Sales- USD 1 million

Value of the accounts receivable balance at END OF THE YEAR - 900,000

DSO - (900000)/2000000 * 365 = 164.5 DAYS

**Days Sales Outstanding Calculator**

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## 7. Budgeted Cost vs Actual Cost

This key performance indicator is a quantitative value of the variance in the budget costs of operations and transactions and the actual operational and transactional costs incurred by a business in a financial period. This KPI has a massive role to play in successful project management.

**Budgeted Cost vs Actual Cost as a KPI**

The variance in the budget can be used for multifarious key business objectives especially for budgeting and forecasting. For instance, if a company wants to bring efficiency in operations and wants cost to directly link to actual sales then Budgeted Cost vs Actual Cost would be an ideal KPI.

**How to calculate budgeted cost vs actual?**

The value of budgeted cost vs actual can be yielded using the formula-

Actual Cost- Budgeted Cost | x 100 |

Budgeted Cost |

**Example**

Budgeted Costs - USD 90,000

Actual Costs- USD 98,000

The budgeted cost vs actual variance will be - 98000-90000/90000 * 100 = 8000/90000 * 100 = 8.88%.

**Budgeted Cost vs Actual Cost Calculator**

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## 8. Revenue Growth Rate

The revenue growth rate is a key indicator that measures the performance of a company in terms of growing its sales revenue in a given fiscal period. It is an indicator that is computed for a comparative analysis of revenues in the current fiscal period and the previous financial period.

**Revenue Growth Rate as a KPI**

With revenue and profitability being the primary performance indicators of any business, this KPI can be applied to track the progress of different verticals of business success. For instance, if a company introduced a business diversification strategy last year to amplify revenue generation, this is going to be one of the most imperative KPIs.

**How to calculate revenue growth rate?**

The revenue growth rate of an organization between two successive financial periods can be calculated using the formula-

Revenue Generation in the Current Year - Last Year’s Revenue Generation | x 100 |

Last Year’s Revenue Generation |

**Example**

Revenue Generation in a Fiscal Year- USD 750,000

Revenue in Previous Year- 680,000

The Rate of Revenue Growth- 750000-68000/680000 * 100 = 10.29%

**Revenue Growth Rate Calculator**

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## 9. Accounts Receivable Turnover

Accounts receivable turnover is a quantitative measure used in accounting to quantify the efficiency of a business in terms of procuring the money that different clients and customers owe to it. These pending payments that a business is yet to receive for its sales constitute the accounts receivable. To add, accounts receivable turnover is also interchangeably referred to as debtor’s turnover ratio.

**Accounts Receivable Turnover as a KPI**

Accounts receivable turnover plays a pivotal role in gauging the financial performance and revenue of a business. Moreover, this KPI would be a good barometer for a decision or a business objective related to efficiency in debt collection.

**How to calculate the accounts receivable turnover?**

An organization can measure its accounts receivable turnover ratio using the formula-

A Company’s Net Credit Sales |

Average Accounts Receivable |

**Example**

Net Credit Sales in a Financial Year - USD 900,000

Accounts Receivable at the Beginning of Fiscal Year- USD 65000

Accounts Receivable at End of the Financial Year - USD 73000

Accounts Receivable Turnover Ratio- = 900000/((65000+73000)/2) * 100 = 13.04 times

**Accounts Receivable Turnover Calculator**

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## 10. Inventory Turnover

The inventory turnover of a company is basically a ratio depicting the number of instances a company sells or replaces its inventory in the course of a specific time period. This measure facilitates crucial decision-making in the organization with respect to the pricing, procurement, production, and up-gradation of its inventory.

**Inventory Turnover as a KPI**

This key performance indicator can serve multifaceted purposes in a business organization ranging from inventory management to cost management. For instance, if a company wants to lower down its inventory storage cost or wants to increase market share by market penetration strategy then this would be a good KPI to measure the performance.

**How to calculate the inventory turnover?**

The inventory turnover ratio of a company for a specific period can be calculated with the formula-

Cost of Goods Sold (COGS) |

Average Inventory |

**Example**

COGS - USD 55000

Worth of Average Inventory - USD 18000

Inventory Turnover Ratio - 55000/18000 - 3.05 times

Which means inventory turnovers every 4 months

**Inventory Turnover Calculator**

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## 11. Cost of Workforce Percentage

The cost of the workforce in an organization for a specific period takes into account all the expenses incurred by the organization on its employees. These costs include wages, training costs, perks, incentives, bonuses, paid leaves, onboarding costs, health insurance, and so on. To sum it up, the cost of the workforce (COW) is inclusive of all sorts of costs that a company incurs on its employees.

**Cost of Workforce Percentage as a KPI**

A company can use this metric to conduct different kinds of cost analyses related to its workforce. For instance, if a company has a business objective to have the human resource department cost at a certain percentage and has an aim to reduce or keep it at the same levels then the percentage of the cost of the workforce would be a good KPI.

**How to calculate cost of workforce percentage?**

The percentage of the cost of workforce can be computed with the formula-

The Total Cost of Workforce Including Salaries, Training, Perks Etcetera | x 100 |

Total Operational Costs of the Company |

**Example**

The Total Monthly Cost of Workforce - USD 15000

Total Operating Cost - USD 28000

Percentage of the Cost of the Workforce - 53.5%

**Cost of Workforce Percentage with Calculator**

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## 12. Quick Ratio/Acid Test

The quick ratio, also known as the acid test ratio, gives a quantitative analysis of how well the quick assets of a company including its cash and accounts receivable compare with the current liabilities of the company. Besides, it is a key metric in terms of defining a company’s ability to pay its short-term debt obligations. Here, it is vital to note that the quick ratio does not take inventory into consideration.

**Quick Ratio/Acid Test as a KPI**

Because this metric is directly associated with the financial health and progress of an organization, it finds wide application in the business world. For instance, if a company has a business objective to sustain a liquidity level that matches its current cash liabilities then this KPI would be good to measure the success of this objective.

**How to calculate the quick ratio?**

The quick ratio or acid test ratio of a company can be calculated using the formula-

Current Assets - Inventory |

Current liabilities |

**Example**

Worth of Current Assets of a Company- USD 100,000

The Cost of Inventory- USD 25000

Current liabilities- USD 65000

Quick Ratio- 1.15.

Ideally, the quick ratio value for businesses should be 1 or greater

**Quick Ratio/Acid Test Calculator**

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## 13. Price to Earnings Ratio (P/E)

The price-to-earnings ratio measures the current share price value of a company relative to the earnings per share. The terms price-to-earnings ratio, price multiple, and earnings multiple are used interchangeably hinting at the same context. It is a KPI that companies extensively use to assess the value of their shares in comparison to the previous values or the stocks of the competitors.

**Price to Earnings Ratio (P/E) as a KPI**

This KPI can be used to track different strategic plans being pursued by a given organization in regard to the valuation of the company. To exemplify, if a company has a strategic objective to provide a good return on investment to its investors, this KPI would be good to measure the value of investment needed with regards to earnings. The ideal P/E ratio is 20 times.

**How to calculate the price-to-earnings ratio?**

The quick ratio or acid test ratio of a company can be calculated using the formula-

Market Value Per Share |

Earnings Per Share |

**Example**

The Market Value of a Company’s Share- USD 220

Earnings Per Share- USD 11

The P/E Ratio will be 20.

**Price to Earnings Ratio Calculator**

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## 14. Debt to Equity Ratio

The debt to equity ratio also called the risk ratio is a computation of the weightage of a company’s total debt and financial liabilities as against the summation of shareholders’ equity. This measure indicates if a company’s capital structure is inclined towards debt or equity.

**Debt to Equity Ratio as a KPI**

This KPI can be used to determine different dimensions of a company’s financial health. It can be used to keep an eye on financial costs, financial leverage. Let’s say a company has the objective to keep financial costs at a certain percentage or to keep leverage at a certain level. In this case, this KPI will make a lot of sense.

**How to calculate the debt to equity ratio?**

The debt to equity ratio can be calculated using the formula-

Total Liabilities (Short Term Debts + Long Term Debts + Fixed Payments) |

Shareholders’ Equity |

**Example**

Total Liabilities of a Company- USD 120,000

Total Shareholders’ Equity- USD 47000

Debt to Equity Ratio- 2.55

**Debt to Equity Ratio Calculator**

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## 15. Bad Debt

In the simplest terms, bad debts are defined as outstanding payments and balances that are deemed unrecoverable and need to be written off. Businesses land in bad debt situations because of extending credit to customers and clients despite the involvement of high risks. As implied, the higher the volume of bad debt the lower will be the company’s profitability.

**Bad Debt as a KPI**

The estimation of bad debt is crucial for a company for different purposes like planning contingencies, changing credit policies etcetera. For instance, suppose a company has the objective to reduce contingent costs or is evaluating a proposal to extend collections to third parties and improve collections. For both these objectives, the bad debt percentage would be an appropriate KPI.

**How to calculate the percentage of bad debts?**

The percentage of bad debts can be calculated with the formula-

Total Bad Debts | x 100 |

Total Credit Sales |

**Example**

Total Credit Sales in a Fiscal Year - USD 200,000

Bad Debt and Unrecoverable Payments - USD 40000

Percentage of Bad Debt- 20 Percent.

**Bad Debt Calculator**

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## 16. Return on Equity (ROE)

Return on equity is one of the most salient measures of the financial health of a business. It exhibits business profitability relative to shareholders’ equity in an organization. In simpler terms, it can also be understood as the ratio between a company’s net income and the average shareholders’ equity.

**Return on Equity (ROE) as a KPI**

The calculation of this metric can facilitate a wide class of financial or planning objectives in an organization. To exemplify, if a business organization is planning equity investments in the future, this KPI will be a vital metric.

**How to calculate return on equity?**

The return on equity can be computed using the following formula-

Net Income of a Business |

Average Shareholder’s Equity |

**Example**

Net Income of a Company in a Fiscal Year- USD 2500000

Average Stakeholder’s Equity- USD 35000000

ROE - 0.071 or 7.1%

**Return on Equity Calculator**

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## 17. ROA (Return On Assets)

Profitability is a key concern for all businesses and business leaders are keen to look into every measure of business profitability. This is where ROA proves to be of great significance. It is an indicator measuring the overall profitability of a business relative to its assets. In other words, it is a depiction of how effectively a company manages and utilizes its assets to grow its earnings.

**ROA (Return On Assets) as a KPI**

Companies invest in assets like machinery, automatic plants, or other assets to optimize efficiency. For example, in case a company wants to increase sales by installing a plant, ROA would be a good KPI to know whether the company’s income has increased or decreased with respect to investment.

**How to calculate ROA?**

The return on assets (ROA) can be computed using the formula-

Net Income |

Total Assets |

**Example**

Net income in a fiscal year - USD 1.8 billion

Worth of total assets of the company- USD 20.5 billion

The ROA = 8.78 percent.

**ROA Calculator**

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## 18. Average Annual Sales Value Per Customer

This key performance indicator gives a statistical value of the average value contributed by each customer of a company in its annual sales. Simply put, it is the ratio of the total sales of a company per annum and the number of customers.

**Average Annual Sales Value Per Customer as a KPI**

Companies invest a lot of money for retaining customers or bringing in new customers thus a KPI is required to measure the success of these activities. To cite an example, let us say a company has the business objective of retaining customers by providing them with freebies and using other promotional activities. Corresponding to this objective, the Average Annual Sales Value Per Customer would be a good KPI to consider for evaluating the success of the activities.

**How to calculate the average annual sales value per customer?**

The average annual sales value per customer can be calculated with the formula-

The Total Volume of Sales Per Year |

Number of Customers |

**Example**

The value of sales for a company in a fiscal year - USD 500,000

The number of customers that the company has - USD 1200

The average sales value per customer = USD 416.6

**Average Annual Sales Value Per Customer Calculator**

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## 19. Accounts Payable Turnover

The accounts payable turnover ratio is a quantitative measure of the rate at which a business pays off its associate suppliers. The accounts payable turnover determines the number of times a company settles its accounts payable in a given fiscal period.

**Accounts Payable Turnover as a KPI**

Accounts Payable Turnover can be a KPI for an objective such as bringing efficiency in paying the suppliers or reducing current liabilities.

**How to calculate the accounts payable turnover?**

The accounts payable turnover ratio can be calculated using the formula-

Net Supply Purchases |

Average Accounts Payable |

**Example**

Worth of total supply purchases made by a company during a financial year- USD 700,000

Accounts payable at the beginning of the year - USD 100,000

Accounts payable at the end of the fiscal year - USD 70,000

The average accounts payable - USD 85000.

Accounts payable turnover = 8.23

So, let us assume that the total supply purchases made by a company during a financial year were worth USD 700,000. Now, assuming that the accounts payable at the beginning of the year were USD 100,000 while the accounts payable at the end of the fiscal year were USD 70,000, the average accounts payable comes out to be USD 85000. As per the formula, the accounts payable turnover will be 8.23.

**Accounts Payable Turnover Calculator**

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