January 2, 2021
For a successful business into the future, it is important to be able to measure and understand its financial health. Financial stability is crucial for a business to survive. It also ensures opportunity for growth and success.
There are many key performance indicators that will help a business owner to track and monitor financial health. Here are some basics to get you started:
Gross Profit Margin: Profit after direct costs.
Net Profit Margin: Profit after all expenses.
Cash Flow: Cash Inflows v Cash Outflows
Break-Even Point: The point at which Revenue = Costs
Accounts Receivable Turnover: How quickly payments are received
Regardless of size, all business owners should monitor financial health on a continuous basis. This will enable owners to be proactive and make changes as and when required.
