10 financial indicators you need to know
Posted: Mon Dec 23, 2024 6:08 am
Financial indicators are metrics that companies must take into account to measure how efficient their financial management is . To make monitoring and measurement less complex, many resort to using corporate software that provides access to dashboards with updated KPIs, as is the case with collection software.
While there are different metrics an organization can consider, in this post we share a list of the top 10 financial indicators .
What will you find in this text?
1. Gross Margin
2. Net Margin
3. Return on investment
4. ROE
5. Current ratio
6. Acid test
7. Accounts receivable turnover
8. ROA
9. Total indebtedness
10. Accounts payable turnover
1. Gross Margin
This indicator allows the company to know the amount of profits it buy sms list without deducting taxes. In this sense, the formula it uses is:
This is an important indicator to know how profitable the organization is. The higher it is, the better the profitability of the company will be for potential investors or banking entities from which financing is requested.
2. Net Margin
This KPI is similar to the previous one, with the difference that instead of Gross Profit, Net Profit is used, that is, the gross profit from which the organization's expenses have been subtracted. The net margin formula is:
3. Return on investment
ROI is a financial indicator that allows you to know how much a company earns for each investment made. To obtain the ROI, you have to subtract the cost (investment) from the profit (income) and then divide it by the cost (investment).
Here's an example: let's say a company invests 500 soles in online advertising and gets 800 soles in additional revenue as a result of this investment. What would be its ROI?
While there are different metrics an organization can consider, in this post we share a list of the top 10 financial indicators .
What will you find in this text?
1. Gross Margin
2. Net Margin
3. Return on investment
4. ROE
5. Current ratio
6. Acid test
7. Accounts receivable turnover
8. ROA
9. Total indebtedness
10. Accounts payable turnover
1. Gross Margin
This indicator allows the company to know the amount of profits it buy sms list without deducting taxes. In this sense, the formula it uses is:
This is an important indicator to know how profitable the organization is. The higher it is, the better the profitability of the company will be for potential investors or banking entities from which financing is requested.
2. Net Margin
This KPI is similar to the previous one, with the difference that instead of Gross Profit, Net Profit is used, that is, the gross profit from which the organization's expenses have been subtracted. The net margin formula is:
3. Return on investment
ROI is a financial indicator that allows you to know how much a company earns for each investment made. To obtain the ROI, you have to subtract the cost (investment) from the profit (income) and then divide it by the cost (investment).
Here's an example: let's say a company invests 500 soles in online advertising and gets 800 soles in additional revenue as a result of this investment. What would be its ROI?