Top Financial KPIs to Track

Companies and their CEOs obsess over Profitability KPIs. But measuring Profit doesn’t drive Profit. Here’s the problem: Most leaders don't track the right metrics. They don't understand why they matter. They ignore stakeholder perspectives. If you don’t know and act on what the numbers are telling you - you’re not managing profitability. You’re just collecting data. Let’s fix that. Here are 16 Profitability KPIs every CEO and CFO needs to master—and how to extract the insights that drive smarter decisions: ■ Efficiency and Margins 1// Gross Profit Margin Ratio ↳ Why it matters: high margins signal strong pricing power or cost efficiency. 2// Contribution Margin ↳ Why it matters: critical for setting prices, understanding break-even points, and ensuring your products are profitable. 3// Operating Profit Margin Ratio ↳ Why it matters: reveals how well you’re managing core expenses 4// Net Profit Margin Ratio ↳ Why it matters: measures whether your business model scales profitably. 5// Return on Assets (ROA) ↳ Why it matters: shows how effectively your assets generate profit. 6// Return on Equity (ROE) ↳ Why it matters: measures investor return on their investment. 7// Return on Investment (ROI) ↳ Why it matters: helps prioritize high-ROI projects and avoid initiatives with weak returns. 8// Return on Capital Employed (ROCE) ↳ Why it matters: indicator for how well your business uses all available capital to drive profits. ■ Earnings and Market Performance 9// Earnings per Share (EPS) ↳ Why it matters: tells shareholders how much value each share represents. 10// Price-to-Earnings (P/E) Ratio ↳ Why it matters: gauges whether your stock is fairly priced based on earnings. 11// Dividend Yield Ratio ↳ Why it matters: income-focused investors seeking regular returns. 12// Dividend Payout Ratio ↳ Why it matters: balances reinvesting for growth with rewarding shareholders. ■ Cash Flow and Productivity 13// Operating Cash Flow Margin ↳ Why it matters: shows how well you convert revenue into cash. 14// Profit Per Employee ↳ Why it matters: tracks workforce productivity—a crucial metric for scaling efficiently. ■ Advanced Profitability Metrics 15// Economic Value Added (EVA) ↳ Why it matters: measures value above the company's cost of capital. 16// Break-even Revenue ↳ Why it matters: knowing your break-even helps you set realistic sales targets and avoid losses. The takeaway? Stop chasing KPIs for the sake of it. Start using them to lead smarter and grow faster. Want to join the 1% of CEOs who lead with financial intelligence? ▷▷▷ Join me tomorrow for a free webinar for CEOs, VPs, Managers, and leaders and start making 100% better business decisions: https://bit.ly/ceojan18 ▷▷▷ Transform your financial acumen in 6 weeks - live program, spots are limited, starts January 29: https://bit.ly/3ZCI0kr ♻️ Like, Comment, Repost if this was helpful. And follow Oana Labes, MBA, CPA for more

20 profit ratios that will transform how you analyze any business The numbers never lie, but you need to know how to read them 📊 Let me break down the most critical financial metrics you'll ever need 👇 ➡️ CORE PROFITABILITY RATIOS These ratios tell you exactly how well a business turns revenue into profit: 1️⃣ Gross Profit Margin The foundation of business profitability - what's left after direct costs. When this number drops, it's often the first sign of pricing pressure or rising material costs. 2️⃣ Operating Profit Margin This strips away the noise and shows pure operational performance. Want to know if a business is actually good at what it does? This ratio tells you. 3️⃣ Net Profit Margin The bottom line that matters. Shows exactly what you're left with after everything's paid. 4️⃣ EBITDA Margin Strips out accounting decisions to show true operational performance. Critical for comparing companies with different capital structures. ➡️ RETURN RATIOS - THE REAL PERFORMANCE INDICATORS 5️⃣ Return on Equity Your shareholders' report card. This number can make investors either jump for joy or run for the hills. 6️⃣ Return on Assets  Shows how well a company uses its assets to generate profits. This ratio becomes crucial when comparing asset-heavy industries. 7️⃣ Return on Capital Employed The heavyweight champion of performance metrics. It's like ROE and ROA had a super-smart baby. ➡️ EFFICIENCY RATIOS Now we're getting to the good stuff… 8️⃣ Asset Turnover Reveals how efficiently a company generates sales from its assets. Higher ratios usually mean better operational efficiency. Think of this as your business's speedometer. The faster it spins, the more efficient you are. 9️⃣ Inventory Turnover Critical for retail and manufacturing - shows how quickly inventory moves. Lower numbers might signal obsolete stock or poor purchasing decisions. 🔟 Accounts Receivable Turnover Measures how fast a company collects what it's owed. This ratio directly impacts cash flow - the lifeblood of any business. ➡️ MARKET PERSPECTIVE RATIOS 1️⃣1️⃣ P/E Ratio The market's expectation of growth packed into one number. But remember - high P/E isn't always better. It's about whether the company can meet those expectations. 1️⃣2️⃣ EPS Growth Shows the rate of earnings growth per share. This becomes powerful when tracked over multiple quarters. === Three principles I always follow when using these ratios: 1. Compare within industries - ratios mean different things in different sectors 2. Look for trends - a single number means nothing without context 3. Use multiple ratios - they work together to tell the complete story Which ratio do you find most valuable in your analysis? Share your thoughts in the comments below 👇

This small shift in our finances helped us scale past $50K/month. We stopped focusing on revenue. And started tracking the right numbers: 1. Gross profit. Because revenue is a vanity metric if your costs are eating all your margins. We focused on delivering our services in the most efficient way possible. 2. Net profit. More revenue without margins is working harder for the same outcome. We got obsessive about efficiency: Cutting unnecessary software costs Negotiating better deals And streamlining operations To increase what we actually add to the bank every month. 3. Churn rate. It’s easy to celebrate new sales. But if customers are leaving just as fast, you're running on a treadmill. We optimized retention before acquisition. 4. LTV. Scaling without understanding customer lifetime value is a dangerous game. Once we figured out exactly how much a client was worth over time, we knew how much we could afford to acquire them. 5. LTV to Acquisition Cost Ratio. The simplest way to tell if your business is scalable. If you're paying more to acquire customers than they’re worth over time, you're in trouble. We optimized this ratio to make sure every dollar spent on growth actually paid off. You usually want to have a ratio of 3:1 of LTV/CAC. These five numbers moved us from "How much did we make this month?" to "How much will this business be worth in three years?" Most founders don’t track these. Don’t make that mistake. Track the right numbers. Make better decisions. Your growth depends on it. What’s the one metric you obsess over in your business? 👇 PS: Fuelfinance has been the best partner to help with our finances.

Most CEOs drown in vanity metrics. While the crucial numbers slip through their fingers. The harsh reality? Your $1M MRR means nothing when you have 2 months of runway left. Your 300% annual growth means nothing when retention drops below 70%. To scale smarter and lead with clarity, master these 10 KPIs: 1/ Cash Burn ↳ Track it to avoid running out of time and options 2/ Runway ↳ Understand how long you can survive without new funding 3/ Working Capital ↳ Your safety net for daily operations and stress-free growth. 4/ Revenue Growth Rate ↳ Momentum matters—steady increases show scalability. 5/ Employee Costs ↳ Ensure revenue per employee drives efficiency and value. 6/ Budget vs. Actual ↳ Spot gaps early to adjust strategy before it’s too late. 7/ Gross Margin ↳ Strong margins fuel reinvestment and sustainable scaling 8/ Customer Retention ↳ Keeping customers is always cheaper than finding new ones. 9/ Customer Acquisition Cost ↳ Control CAC to ensure scaling doesn’t erode profitability. 10/ Profitability ↳ The ultimate check on your financial health and flexibility. The truth? Metrics don't run companies—leaders do. But without the right KPIs, even great leaders can lose sight of what matters. Which KPI do you track most? ♻️ Share to help others focus on what matters. And follow Mariya Valeva for more

Track the Right Numbers; Not Just the Loudest Ones 🚨 Stop Chasing Vanity, Start Scaling with Clarity Most business owners fall into the same trap, tracking the loudest numbers instead of the right ones. They obsess over follower counts, web traffic, or gross revenue, but completely ignore what actually drives scalable growth. Let me be blunt: Scaling your business isn’t about what looks good. It’s about what works. 💡 Early in my retail business career, I learned this lesson the hard way. We were tracking the wrong KPIs, foot traffic, sales per square foot, NPS, even daily cash in the till, without ever tying those numbers to margins, lifetime customer value, or conversion rates. Don't get me wrong, those aren't unimportant metrics, per se, but when you are trying to turn a profit, those aren't the most critical KPIs. We grew... but not at a significantly profitable rate. 📊 Here’s what changed everything: We shifted our tracking from noise to impact metrics. That meant focusing on: ✅ Customer Acquisition Cost (CAC) ✅ Lifetime Customer Value (LCV) ✅ Conversion Rate by Source ✅ Sales Velocity per Rep ✅ Retention and Churn Rates ✅ Net Profit Margins ✅ Forecast Accuracy vs Actuals And guess what? That clarity gave us control. 📈 According to a study by Harvard Business Review, companies that implement data-informed decision making grow 15-20% faster than their competitors. It’s not about tracking everything. It’s about tracking the right things. 🔥 Don’t just watch numbers. Let them tell you a story; one that fuels momentum, forecasts growth, and uncovers blind spots before they become breakdowns. If your current dashboard isn’t giving you confidence in your next move, it’s time to evolve your metrics. Because if you don’t know the scoreboard, how can you win the game? #MyBizCoaches #BusinessConsulting #FractionalExecutives #KnowYourNumbers #SmartScaling

My post on formatting SaaS financials has received almost 200k impressions as of today. It seems I am not the only person frustrated with inconsistent reporting, metrics overload, and lack of visibility into what actually matters. My post failed to explain why you should track the metrics that I selected, so I'll explain that here. In reality, only a few metrics in business REALLY (hello CASH) matter. Everything else is just derivative. So here are the questions I am trying to answer with each metric: ARR: How much revenue are we generating? Growth Rate: Is the revenue growing or shrinking? How fast? Average Revenue per Account and Customer Count: What’s the breakdown of our revenue in terms of average account size and customer count? How is it trending? Gross Revenue Retention and Net Effective Retention Rate: How long do our customers stick around and do they typically upgrade or downgrade? CAC: How much does it cost to acquire a customer? Gross Margins: How much does it cost to service a customer? CAC Payback Period: How quickly do we make our money back after acquiring a customer? R&D Spend: How much are we investing in long-term growth? When do we expect to start generating money from these long-term investments? What’s our expected ROI? G&A Spend: How much do we spend on overhead to support all of this? ARR per FTE: Are we efficient? Cash Flow Statement: What’s driving the increase/decrease in our cash? Months Burn: Do we need more outside money either in the short-term or long-term? And to simplify things even further, what I am really trying to answer as a CFO is the following: What's our cash look like in the short-term and the long-term? KISS: Keep it Simple Stupid #SaaS #Startups #Finance #founders #Bootstrapping

Just had an insightful conversation about Money (and finance) with Sonny Gill.  On a ResultMaps podcast we'll call "Money with Sonny" (props Erika Riehle). We talked about the numbers that truly matter for scaling businesses. I found these insights worth highlighting: 1️⃣ NRR (Net Recurring Revenue) vs GRR (Gross Retention Rate) While GRR simply measures if you've retained customers, NRR captures the FULL picture including expansion and contraction. As Sonny wisely noted, "It's the measure of how the value of a customer has changed over a period, not just whether you retained that customer." The frustration? Defining what constitutes "contraction" - especially for companies with complex pricing models beyond simple seat licensing. His advice: "Keep it simple. If a customer value is $100 on Jan 1, if that value increases it's expansion, if it decreases it's contraction." 2️⃣ Rule of 40 This might be one of the most honest metrics in SaaS. It combines growth rate + profit margin, which should equal 40+. Why it matters: "It ensures you keep a balanced look at how you're investing resources and aren't chasing growth at all costs," which often means negative margins. Similarly, it prevents you from pursuing profits by grinding down R&D and marketing - decisions that damage long-term business health. 3️⃣ Beyond Financials When I asked what metrics should always be on a business health dashboard, Sonny emphasized non-financial indicators: • Market share/penetration • Employee NPS/engagement  • Customer satisfaction His warning: "If your heat map is green but your business isn't progressing, you're not measuring the right things." The most critical insight? Context matters. "Understand where your business is in its lifecycle and what you're trying to achieve." Don't just grab standard metrics from the internet - if you're targeting an MVP in six months, NRR might be irrelevant compared to product and engineering KPIs. What metrics have you found most valuable at your current business stage? And which ones do you think you might be overvaluing? [Check the full interview in the comments]