A Key Performance Indicator is a measurable value that demonstrates how effectively a company is achieving key business objectives. Organizations use KPIs at multiple levels to evaluate their success at reaching targets. VComply helps an organization to assign KPIs to individuals on a single integrated platform.
Monthly Recurring Revenue (MRR)
It looks only at the revenue you generate each month which will re-occur with little to no additional investment required. If a customer subscribes to a monthly subscription of a magazine, it increases the MRR.
Gross Profit Margin
Expresses your profits as a percentage of total sales revenues generated. This gives you a high level view of how much profit you’re making, although it doesn’t factor in all expenses so shouldn’t be used for detailed decision making. It is however useful for bench-marking your performance over time, or comparing your profitability to another similar company.
Net Profit Margin
Is the percentage of revenue remaining after all operating expenses, interest and taxes have been deducted from a company’s total revenue. This gives a more accurate internal figure for understanding profit, but is less useful for comparisons outside of your company.
Return on Equity (ROE)
Measures your net income against each unit of shareholder equity. Return on equity ratio not only provides a measure of your organization’s profitability, but also its efficiency. Less useful for startups, but an important KPI for established organizations.
Calculate how much money you’re are spending each period. Divide the total amount of cash you have available by this figure, to give you your runway in months. You understand how much time you have for survival in the worst case scenario of sales stopping completely.
The Current Ratio KPI weights your assets, such as accounts receivables, against your current liabilities, including accounts payable, to help you understand the solvency of your business.
Working Capital Ratio
This is calculated by subtracting current liabilities from current assets. Assets include things like cash on-hand, short-term investments, and accounts receivables. Liabilities includes things like loans, accounts payable, and accrued expenses. It gives you a nice picture of your company’s health by evaluating available assets which can be used to meet short-term financial liabilities.
Accounts Receivable Turnover
Shows you the rate at which you are collecting what is owed to you by customers. Firstly, calculate the KPI by taking total earnings in a given time period. Then, match it against your average accounts receivable in the same period of time. It’s best to monitor this over time so that you can use it as an early warning system for your customers who are to take longer and longer to pay you . If this happens, it will impact your own liquidity soon enough.
Revenue per Customer
The calculation will vary depending on the type of business. One can look at the Life Time Value (LTV) of a customer.
Revenue per FTE
With employee costs usually making up the bulk of a company’s expenses, it’s often useful to measure how much revenue you are actually generating for each employee in your company. Also, this gives you an idea of whether or not you’re making an appropriate amount of revenue for the size of your business.
Revenue Growth Rate
This KPI helps to ensure your business continues to grow at a target rate, measured by a percentage. Ideally you would measure this monthly or on a 12 month rolling average basis. Generally, compared with industry standards.
Cash Conversion Cycle
Measures the time it takes to convert an investment in inventory or some other resource input into cash. This gives you an understanding of how long cash is stuck up in inventory before they sell the inventory and collect the cash from customers.
Asset Turnover Ratio
Measures a company’s ability to generate sales from its assets by comparing net sales with average total assets. For example, a ratio of .5 would mean that each unit of money spent on assets generates 0.5 units of money via sales.Add to favorites