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Sunday, April 4, 2010

Top 5 Financial Metrics

To relentlessly move business forward, a review of the metrics that are telling the story of the business direction is essential.    There are numerous key performance indicators (KPI) that can tell the story.  In order to keep an eye on the business/s the five discussed in this review can keep you informed of the health of the organization.
  • Net Cash Flow - Cash is the lifeblood of the organization.  Without cash, the business will not achieve its potential and may miss growth opportunities.
  • Revenue Growth - This metric can show from an historical perspective an indicator to judge the performance of the business and build and expectation model.
  • Gross Margin - This is a key metric to monitor and drive the profitability of the business.  Increasing gross margin on product through cost reduction and market positioning.
  • Sales, General and Administration (SG&A) - Monitor SG&A to the return on investment (ROI) for the projects, margin, and revenue.
  • Operating Margins - This will provide an indicator of the business profitability.

      Jack Welch states, “An organization's ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage.”  Understanding, communicating and learning from the key financial metrics will keep you in front with your business.