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20 Financial KPIs For The Finance Department

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Financial KPIs are quantifiable metrics that businesses use to track their financial health and performance. They provide valuable insights into various aspects of a company’s finances, helping measure progress towards set goals and identify areas for improvement.

The finance department serves as the backbone of any successful business. It’s the nerve center responsible for the flow of funds, ensuring financial health, and driving strategic growth. Regular key performance indicators tracking provides a clear financial picture for the management reporting and finance department.

This article delves into over 20 essential financial KPIs specifically tailored for the finance department. We’ll explore KPIs across profitability, liquidity, efficiency, growth, and more.

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List With Financial KPIs

  1. Gross profit margin
  2. Net profit margin
  3. Return on equity (ROE)
  4. Return on assets (ROA)
  5. Current ratio
  6. Quick ratio
  7. Debt-to-equity ratio
  8. Debt to Assets
  9. Inventory turnover
  10. Accounts receivable turnover
  11. Days Sales Outstanding (DSO)
  12. Days Payable Outstanding (DPO)
  13. Sales growth rate
  14. Customer acquisition cost (CAC)
  15. Customer Lifetime Value (CLV)
  16. Cost of goods sold (COGS) as a percentage of revenue
  17. Selling, general & administrative (SG&A) expenses as a percentage of revenue
  18. Return on investment (ROI)
  19. EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization
  20. EBIT: Earnings before interest and taxes

Financial Profitability KPIs

The main goal of tracking financial profitability KPIs is to maximize a company’s ability to generate profit from its core business activities. By focusing on metrics like gross profit margin, net profit margin, return on equity (ROE), and return on assets (ROA), the finance department can ensure the company is operating efficiently and generating a healthy return on its investments.

  • Measure Success: track progress toward profit goals and assess the effectiveness of your business strategies.
  • Identify Opportunities:Analyzing trends in profitability KPIs can reveal areas where you can improve efficiency, reduce costs, or increase revenue. This can lead to informed decisions about pricing, resource allocation, and investment opportunities.
  • Benchmark Performance: By comparing your profitability KPIs to industry averages or competitor data, you can gauge your relative efficiency and identify areas for improvement.
  • Drive Strategic Decision Making: Understand your profit margins and return on investment to evaluate potential investments, pricing strategies, and resource allocation plans.
  • Improve Communication: Profitability KPIs can help communicate financial performance to stakeholders like investors, management, and employees.
Financial Profitability KPIs benefits infographic
Infographic with 5 benefits of tracking financial profitability KPIs

1. Gross profit margin

This KPI measures the percentage of revenue left over after deducting the cost of goods sold (COGS). A higher gross profit margin indicates a company is more efficient at managing its production costs.

Gross Profit Margin Rate = (Gross Profit / Revenue) x 100%

You can calculate this metric using a gross profit margin calculator.

  • Gross Profit: represents the profit a company makes after deducting the direct cost of producing the goods or services sold (Cost of Goods Sold or COGS).
  • Revenue: the total income generated by the company from its sales activities.

Good Score:

A good gross profit margin rate can vary depending on the industry. However, a generally good range is between 60% and 70%.

2. Net profit margin

This KPI measures the percentage of revenue remaining after accounting for all expenses, including operating expenses, interest, and taxes. A higher net profit margin indicates a company is more effective at generating profits.

Net Profit Margin Rate = (Net Profit / Revenue) x 100%

You can calculate this metric using a net profit margin calculator.

  • Net Profit: the company’s final profit after deducting all expenses from its revenue. This includes costs like production (COGS), operating expenses (rent, salaries, marketing), interest, and taxes. It reflects the overall profitability of the business.
  • Revenue: the total income generated by the company from its sales activities.

Good Score:

A good net profit margin rate can vary depending on the industry. However, a generally healthy range is between 5% and 10%.

3. Return on equity (ROE)

This KPI measures the amount of net profit a company generates relative to shareholders’ equity. A higher ROE indicates a company is more effective at using shareholders’ money to generate profits.

ROE = (Net Profit / Shareholders’ Equity) x 100%

  • Net Profit: the company’s final profit after deducting all expenses from its revenue. This reflects the overall profitability of the business.
  • Shareholders’ Equity: the total value of the company’s equity that belongs to its shareholders. It’s calculated by subtracting total liabilities from total assets.

Good Score:

A good ROE rate can vary depending on the industry and a company’s growth stage. However, a generally good range is between 10% and 15%. Here’s a simplified guideline:

4. Return on assets (ROA)

This KPI measures the amount of net profit a company generates relative to its total assets. A higher ROA indicates a company is more effective at using its assets to generate profits.

ROA = (Net Profit / Total Assets) x 100%

You can calculate this metric using the return on assets calculator.

  • Net Profit: This represents the company’s final profit after deducting all expenses from its revenue. This reflects the overall profitability of the business.
  • Total Assets: This represents the total value of everything a company owns, including cash, inventory, property, equipment, and intangible assets like patents. It’s essentially a snapshot of everything the company has to work with.

Good Score:

A good ROA rate can vary depending on the industry and a company’s asset intensity (how heavily it relies on assets to generate revenue). However, a generally good range is between 5% and 10%.

Financial Liquidity KPIs

The main goal of tracking financial liquidity KPIs is to maintain a healthy level of cash flow that allows the company to meet its short-term obligations comfortably. By monitoring key metrics like the current ratio and quick ratio, the finance department can assess the company’s ability to pay off current liabilities with its current assets.

Here are the benefits of tracking these metrics:

  • Enhanced Financial Security: Tracking liquidity KPIs helps identify potential cash flow shortages and allows for proactive measures.
  • Improved Financial Planning & Forecasting: By analyzing historical liquidity data, the finance department can create more accurate financial forecasts.
  • Reduced Risk of Insolvency: A company with strong liquidity is less likely to default on its debts. Monitoring liquidity KPIs helps the finance department identify potential risks early on and take corrective actions to prevent insolvency.
  • Increased Confidence from Investors & Creditors: Businesses with healthy liquidity ratios are seen as more financially stable and reliable. This can boost investor confidence and make it easier to secure financing at favorable terms.
  • Improved Decision-Making: Understanding your liquidity position empowers you to make informed decisions about resource allocation, inventory management, and debt financing.
Infographic that displays Financial Liquidity KPI benefits
Infographic with benefits for financial liquidity KPI

5. Current ratio

This KPI measures a company’s ability to pay its current liabilities (debts that are due within one year) with its current assets (assets that can be converted to cash within one year). A current ratio of greater than 1 indicates a company is likely to be able to meet its short-term obligations.

Current Ratio = Current Assets / Current Liabilities

  • Current Assets: These are assets that a company can convert into cash within one year. Examples include cash, accounts receivable (money owed by customers), inventory, and marketable securities.
  • Current Liabilities: These are obligations a company expects to pay within one year. Examples include accounts payable (money owed to suppliers), short-term debt, and accrued expenses.

Good Score:

A good current ratio indicates a company’s ability to meet its short-term financial obligations. However, the ideal ratio can vary depending on the industry.

Current RatioInterpretation
Above 3.0Potentially excessive current assets, might indicate inefficiency
1.5 to 3.0Generally, good range indicates the ability to meet short-term obligations
Below 1.0Warning sign, potential difficulty paying short-term debts
Current ratio rates interpretation

6. Quick ratio

This KPI is similar to the current ratio, but it excludes inventory from current assets. This is because inventory is typically the least liquid asset. A quick ratio of greater than 1 indicates a company is highly liquid.

Financial Solvency KPIs

The main goal of tracking financial solvency KPIs is to ensure the company has the long-term financial strength to meet its debt obligations and remain operational for the foreseeable future.

Here’s how tracking these metrics can help you:

  • Reduced Risk of Financial Distress: identify potential financial vulnerabilities and allow proactive measures to reduce debt and improve the company’s financial standing.
  • Improved Creditworthiness: Strong solvency ratios signal a lower risk of default to creditors. This can lead to better credit ratings, allowing the company to access loans and lines of credit at more favorable interest rates.
  • Enhanced Investor Confidence: Investors are more likely to invest in companies with strong solvency. Tracking and maintaining healthy solvency ratios can boost investor confidence and attract new investments for growth opportunities.
  • Informed Strategic Decisions: make informed decisions about debt financing, capital allocation, and dividend payouts. You can assess the risk of taking on additional debt or determine if it’s financially prudent to distribute profits to shareholders.
  • Proactive Risk Management: take corrective actions to mitigate risks and ensure the company remains financially stable in the long run.
Infographic for financial solvency KPI benefits
Infographic with benefits for financial solvency KPIs

7. Debt-to-equity ratio

This KPI measures the amount of a company’s debt relative to its shareholders’ equity. A lower debt-to-equity ratio indicates a company is less risky and more financially stable.

Debt-to-Equity Ratio = Total Liabilities / Shareholders’ Equity

  • Total Liabilities: represents all a company’s financial obligations that it owes to creditors. It includes short-term liabilities (like accounts payable) and long-term liabilities (like long-term debt).
  • Shareholders’ Equity: the total value of the company’s equity that belongs to its shareholders. It’s calculated by subtracting total liabilities from total assets.

Good Score:

  • A good ratio indicates a company’s financial leverage, or how much debt it uses to finance its operations. A good range is anything below 2.
  • A higher than 2 could indicate the company is taking on more risk by financing its operations with a higher proportion of debt.
  • A lower ratio is generally considered better as it suggests the company relies less on debt.

The ideal ratio can vary depending on the industry and the company’s growth stage.

8. Debt to Assets

The debt-to-asset ratio assesses a company’s financial health by indicating the proportion of its assets financed through debt.

Debt-to-Assets Ratio = Total Liabilities / Total Assets

Explanation of Variables:

  • Total Liabilities: This represents all a company’s financial obligations that it owes to creditors. It includes short-term liabilities (like accounts payable) and long-term liabilities (like long-term debt).
  • Total Assets: This represents the total value of everything a company owns, including cash, inventory, property, equipment, and intangible assets like patents. It’s essentially a snapshot of everything the company has to work with.

Good Score:

The ideal ratio can vary depending on the industry and the company’s growth stage. Here’s a general guideline:

  • Generally good range:Below 0.5 (or 50%)
  • Higher than 0.5: This could indicate the company is taking on more risk by financing its assets with a higher proportion of debt. It’s important to monitor this ratio closely and ensure the company can manage its debt obligations.
  • Much higher than 0.5: This raises a red flag, suggesting the company might be heavily reliant on debt and could be vulnerable to financial difficulties if economic conditions worsen.

Financial Efficiency KPIs

The main goal of tracking financial efficiency KPIs is to optimize the use of financial resources to achieve maximum profitability and long-term financial sustainability. By monitoring key metrics and analyzing their trends, businesses can identify areas for improvement and get several benefits:

  • Improved Decision Making: gain data-driven insights into profitability, operational costs, and resource utilization.
  • Enhanced Operational Efficiency: identify areas for improvement in processes, inventory management, and resource allocation.
  • Benchmarking and Competitiveness: understand your company’s relative performance. Identify areas where you excel or might be lagging behind competitors.
  • Risk Management: identify potential cash flow problems and payment delays. Early detection of potential risks allows for proactive measures to mitigate them.
  • Improved Communication and Alignment: KPIs foster better communication, collaboration, and alignment between departments toward achieving shared financial goals.
Infographic with financial efficiency KPIs with benefits
Infographic with benefits for financial efficiency KPIs

9. Inventory turnover

This KPI measures how many times a company sells and replaces its inventory over time. A higher inventory turnover ratio indicates a company is efficient at managing its inventory levels.

Inventory Turnover Rate = Cost of Goods Sold (COGS) / Average Inventory

  • Cost of Goods Sold (COGS): the direct cost of producing the goods or services a company sells during a specific period. It reflects the cost of inventory used in the production process.
  • Average Inventory: the average value of a company’s inventory throughout a specific period (often a year).

Good Score:

A good inventory turnover rate indicates how efficiently a company is managing its inventory. A higher rate generally signifies better efficiency, as it means the company is selling through its inventory quickly and not holding onto excess stock. However, the ideal rate can vary depending on the industry.

10. Accounts receivable turnover

This KPI measures how many times a company collects its accounts receivable (money owed by customers) over some time. A higher accounts receivable turnover ratio indicates a company is efficient at collecting its debts.

Accounts Receivable Turnover Rate = Net Credit Sales / Average Accounts Receivable

  • Net Credit Sales: the total revenue from credit sales during a specific period (often a year). It excludes any sales returns, allowances, or cash sales.
  • Average Accounts Receivable: the average amount of money owed to a company by its customers on credit sales during a specific period.

Good Score:

A good metric indicates how effectively a company collects payments from its customers on credit sales. A higher rate generally signifies better collection efficiency, as it means the company is collecting its receivables quickly and not experiencing a significant amount of bad debt. However, the ideal rate can vary depending on the industry and a company’s credit policies.

11. Days Sales Outstanding (DSO)

This KPI measures the average number of days it takes a company to collect payment from customers after a sale is made. A lower DSO indicates a company is efficient at collecting its accounts receivable.

DSO = (Average Accounts Receivable / Net Credit Sales) x Number of Days in Period

  • Average Accounts Receivable: the average amount of money owed to a company by its customers on credit sales during a specific period.
  • Net Credit Sales: represents the total revenue from credit sales during a specific period (often a year). It excludes any sales returns, allowances, or cash sales.
  • Number of Days in Period: depends on the time frame you’re using to calculate DSO. It’s typically 365 days (for annual DSO) but could be adjusted to a quarter (90 days) or a month (30 days) depending on your analysis needs.

Good Score:

A good DSO rate indicates how long a company collects payment for its credit sales on average. A lower DSO is generally better, as it means the company collects its money faster and experiences less cash flow disruption.

12. Days Payable Outstanding (DPO)

This KPI measures the average number of days a company takes to pay its suppliers after receiving goods or services. A higher DPO can improve a company’s cash flow in the short term, but it can also damage relationships with suppliers.

DPO = (Average Accounts Payable / Cost of Goods Sold (COGS)) x Number of Days in Period

  • Average Accounts Payable: This reflects the average amount a company owes to its suppliers for credit purchases during a specific period.
  • Cost of Goods Sold (COGS): This represents the direct cost of producing the goods or services a company sells during a specific period.
  • Number of Days in Period: This depends on the time frame you’re using to calculate DPO.

Good Score:

A good DPO rate indicates how long a company takes to pay its suppliers on average. A higher DPO, within reason, can be beneficial as it allows the company to hold onto cash for a longer period. However, there’s a balance to be struck, as excessively long payment terms could damage relationships with suppliers or lead to late payment penalties. The ideal DPO can vary depending on the industry and a company’s negotiation power with suppliers.

Financial Growth KPIs

The main goal of tracking financial growth KPIs is to understand, measure, and optimize the key drivers of a company’s growth. By monitoring these metrics, businesses can ensure they are on track to achieve their strategic growth objectives. This can involve goals like:

  • Measuring Progress towards Growth Goals: track your performance over time and identify areas where you might need to adjust strategies.
  • Improved Resource Allocation: identify the most effective channels for customer acquisition, sales, and market expansion.
  • Enhanced Market Understanding: understand your position in the market and identify potential growth opportunities.
  • Early Identification of Challenges and Risks: Growth can sometimes come with challenges like increasing customer acquisition costs or diminishing returns on marketing investments. Tracking growth KPIs helps identify these potential issues early on.
  • Improved Investor Confidence: Investors rely on financial growth KPIs to assess a company’s potential for future success. Strong and consistent growth metrics can improve investor confidence and attract additional funding to fuel further expansion.
Infographic with financial growth KPI benefits
Infographic with benefits for financial growth KPIs

13. Sales growth rate

This KPI measures the percentage change in a company’s sales from one period to the next. A positive sales growth rate indicates a company is growing its revenue.

Sales Growth Rate = ((Current Period Sales – Prior Period Sales) / Prior Period Sales) x 100%

  • Current Period Sales: the total revenue generated by the company from its sales activities during the current period you’re analyzing (e.g., current year, quarter).
  • Prior Period Sales: the total revenue generated by the company from its sales activities during the period you’re comparing to (e.g., previous year, quarter).

14. Customer acquisition cost (CAC)

This KPI measures the cost of acquiring a new customer. A lower CAC indicates a company is more efficient at marketing and sales.

CAC Rate = (Total Customer Acquisition Costs / Number of New Customers Acquired)

  • Total Customer Acquisition Costs: the total expenses a company incurs to acquire a new customer. It includes marketing and sales expenses like advertising costs, salaries for sales representatives, content marketing efforts, and affiliate marketing fees.
  • Number of New Customers Acquired: the total number of new customers a company gains within a specific period (often a month, quarter, or year).

Good score:

Ideally, your CAC should be significantly lower than your CLTV (customer lifetime value), which represents the total revenue a customer generates for your business over their relationship.

15. Customer Lifetime Value (CLV)

This KPI measures the total revenue a company can expect to generate from a customer over their relationship with the company. A higher CLV indicates that a company is acquiring profitable customers.

CLTV = Average Revenue per Customer x Average Customer Lifespan

  • Average Revenue per Customer: the average amount of revenue a customer generates for the business over a specific period. It can be calculated by dividing the total revenue by the number of customers within that period.
  • Average Customer Lifespan: the average duration a customer remains a paying customer of the business. It can be estimated using historical data on customer churn (customer loss).

Good score:

Your CLTV should ideally be several times higher than your Customer Acquisition Cost (CAC). This ensures you’re making a profit on customer acquisition.

Financial Cost Management KPIs

The main goal of tracking financial cost management KPIs is to optimize your spending, minimize unnecessary expenses, and maximize the value you get from every euro invested. This translates to improved profitability and a more financially sustainable business model. By monitoring these metrics, companies can:

  • Cost Visibility and Control: gain insights and a clear picture of your spending patterns and identify potential areas for cost reduction.
  • Improved Efficiency: reveal inefficiencies in processes, resource allocation, or inventory management.
  • Enhanced Budgeting and Forecasting: predict future expenses with greater confidence and allocate resources more effectively.
  • Better Decision Making: make informed decisions regarding pricing strategies, vendor negotiations, and resource allocation.
  • Improved Profitability: increase profit margins and ensure you’re getting the most value out of your spending, ultimately leading to a healthier bottom line.
Infographic with financial cost KPI benefits
Infographic with benefits for financial cost KPIs

16. Cost of goods sold (COGS) as a percentage of revenue

This KPI measures the percentage of revenue that a company spends on producing its goods or services. A lower COGS percentage of revenue indicates a company is efficient at managing its production costs.

COGS Percentage of Revenue = (COGS / Revenue) x 100%

  • COGS (Cost of Goods Sold): the direct cost of producing the goods or services a company sells during a specific period. It reflects the cost of inventory used in the production process. This includes the cost of raw materials, labor directly involved in production, and any other directly attributable expenses.
  • Revenue: the total income generated by the company from its sales activities during a specific period.

Good score:

A lower COGS percentage of revenue indicates a higher gross margin (revenue minus COGS), which signifies better profitability from core business activities.

17. Selling, general & administrative (SG&A) expenses as a percentage of revenue

This KPI measures the percentage of revenue that a company spends on selling, general, and administrative expenses. A lower SG&A percentage of revenue indicates a company is efficient at managing its overhead costs.

SG&A Expense Percentage of Revenue = (SG&A Expenses / Revenue) x 100%

  • SG&A Expenses: These represent all the indirect operating expenses a company incurs that are not directly related to the production of goods or services. Examples include:
    • Marketing and advertising costs
    • Sales commissions
    • Salaries for administrative staff
    • Rent and utilities for office space
    • Depreciation and amortization expenses
  • Revenue: This represents the total income generated by the company from its sales activities during a specific period.

Generally good range: 15% to 35% This range is a starting point, and the ideal percentage can vary significantly.

Financial Investment KPIs

The main goal of tracking financial investment KPIs is to maximize the return on your investments while managing risk effectively. By monitoring these metrics, you gain these benefits:

  • Measure Investment Performance: quantify the returns generated by your investments and compare the performance of different investments to assess whether they are meeting your expectations.
  • Identify Underperforming Investments: reveal investments that are not generating the desired returns.
  • Improved Risk Management: ensure your portfolio is balanced and not taking on excessive risk for the potential return.
  • Informed Investment Decisions: allocate resources strategically towards opportunities with higher potential returns and align your portfolio with your overall financial goals.
  • Benchmarking Performance: understand how your portfolio is performing relative to others. This can help identify areas for improvement and potentially exceed market averages.
Infographic with financial investment KPI benefits
Infographic with benefits for financial investment KPIs

18. Return on investment (ROI)

This KPI measures the amount of return on investment that a company generates from its investments. A higher ROI indicates that a company’s investments are performing well.

ROI = (Net Profit / Investment) x 100%

  • Net Profit: the company’s profit after accounting for all expenses and taxes during a specific period (often a year).
  • Investment: the cost incurred by the company for the investment being evaluated. It could be the initial cost of a project, a new marketing campaign, or any resource allocation you’re measuring the return on.

Good score:

A positive ROI is ideal indicating that the investment generated a return that exceeded the initial cost. A higher ROI is generally better it signifies a more profitable investment.

19. EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization

This KPI is a measure of a company’s profitability before accounting for financing decisions and accounting charges. EBITDA is often used to compare the profitability of companies in different industries.

EBITDA Rate = EBITDA / Revenue x 100%

  • EBITDA: a company’s profitability from its core operations, excluding the impact of financing choices, tax structures, and accounting decisions related to depreciation and amortization.
  • Revenue: the total income generated by the company from its sales activities during a specific period (often a year).

Higher is generally better a higher EBITDA rate indicates a company is generating more profit from its core operations relative to its revenue.

20. EBIT: Earnings before interest and taxes

A financial metric that shows a company’s profitability from its core operations, excluding the effects of financing decisions and taxes.

EBIT Rate = EBIT / Revenue x 100%

  • EBIT: company’s profitability from its core operations, after accounting for operating expenses but before considering the impact of financing choices (interest) and tax structures.
  • Revenue: the total income generated by the company from its sales activities during a specific period (often a year).

A higher ratio is generally a better EBIT rate indicates a company is generating more profit from its core business activities relative to its revenue, after accounting for operational costs.

How To Create a Financial KPI Dashboard?

Time needed: 5 hours

This guide will show you how to create a KPI (Key Performance Indicator) dashboard using a business intelligence tool with a free tier. While the exact steps might differ slightly depending on the specific software, the overall process remains consistent.

  1. Connect your data source

    In your BI tool, follow the instructions to connect to your data source. Here you can simply upload your Excel, CSV, or Google Sheets file.
    Add data source for kpi dashboard creation on ajelix bi page, screenshot

  2. Clean and transform your data (optional)

    Ajelix BI allows you to clean or transform your data (e.g., converting formats, filtering). This ensures accuracy and consistency. It’s not a mandatory step but recommended for better analytics.
    Data preparation step on ajelix bi portal screenshot

  3. Create calculated fields (optional)

    You might need to create calculations for specific KPIs that aren’t directly available in your data source. In this article, you learned more than 10 vital KPIs you can calculate and measure using Ajelix BI. In the picture below you can see steps on how to create your KPI using data modeling.
    How to calculate KPI metric on ajelix bi dashboard - step by step guide with screenshot from portal

  4. Build your visualizations

    Choose the visual format for each KPI (e.g., card, gauge chart, line graph). Drag and drop data fields into the visualization tool. Ajelix BI offers AI dashboard generator that automatically creates charts based on your data. Give it a try and watch the magic!
    Cost per units metrics visualization on ajelix dashboard screenshot example

  5. Customize your dashboard

    Add titles, descriptions, and format the layout for clarity and visual appeal.

  6. Share your dashboard

    Once happy, publish your dashboard and share it with relevant users for real-time insights.
    share your kpi dashboard with other users using sharing settings screenshot from ajelix bi

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Tools For Tracking Financial KPIs

Several tools can be used for tracking financial KPIs. Here are a few of the most popular:

  • Spreadsheets: simple and free, but can be time-consuming to maintain.
  • Financial accounting software: may already offer KPI tracking features for existing users.
  • Business Intelligence (BI) tools: here’s the list of most popular BI tools for KPI tracking:
    • Ajelix BI: Easy to use with powerful AI features.
    • Power BI: Powerful and integrates well with Microsoft products.
    • Qlik Sense: Handles large datasets efficiently and offers advanced analytics.
    • Domo: Cloud-based platform with a wide range of features including data visualization, warehousing, and machine learning.
    • Tableau: Renowned for its powerful data visualization capabilities.
    • Looker: Cloud-based and designed for ease of use by both business users and data analysts.

FAQ

How often should financial KPIs be tracked and monitored?

The frequency of tracking financial KPIs depends on the specific metric. Operational metrics should be tracked daily or weekly, however, most financial KPIs are tracked monthly and overall financial health indicators are tracked quarterly or annually.

What is the difference between the current ratio and the quick ratio?

Both measure a company’s ability to pay short-term debts (within a year). The current Ratio uses all current assets (including inventory, which can take time to sell) but the quick ratio uses only the most liquid assets (cash, and receivables that can be collected quickly).

Who is responsible for tracking financial KPIs?

The responsibility for tracking KPIs can be shared but often falls to the finance department as they have the data and expertise to analyze financial metrics.

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