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CFOs KPI

What is a CFOs KPI?

A CFOs Key Performance Indicator (KPI) or metric 
is a quantifiable high-level measure of financial 
performance. These KPI metrics can also be used
to measure a company's financial performance relative 
to competitors in the same industry. 

Here are 6 Key Performance Indicators every 
CFO should be aware of...


1. GPM (Gross Profit Margin) -  

GPM compares the cost of the goods or services 
to the income derived from those costs. It determines
how effective the organisation is at making money 
from its revenue production activities.
 
2. Quick Ratio - 

Quick Ratio measures a company's ability to immediately
fulfil its short-term financial obligations. It allows you to
quickly assess the financial health of your company for 
immediate turnaround and decision changes. 

Quick Ratio = (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities

3. EBITDA (Earnings Before Interest, Taxes, 
Depreciation/Amortisation) 

It reflects the operating profitability of a business,
which can effectively be compared between companies 
by owners, buyers, and investors; this is why many 
employ EBITDA over other metrics as it removes 
any bias caused by strategic accounting.

4. Debt-to-Equity Ratio - 

The debt-to-equity (D/E) ratio is used to evaluate 
a company's financial leverage. It measures the 
degree to which a company is financing its operations 
through debt versus wholly-owned funds. 

5. CAGR ( Compound Average Growth Rate) - 

This performance metric calculates how much compound 
growth (positive or negative) the company has achieved 
over a specific period. It tells you what an investment 
yields on an annually compounded basis.

6. Payroll Employee Count  - 

This data is typically used for two purposes: determining
performance metrics on a per-employee basis and illustrating 
how labour costs impact financial performance.

Most CEO/CFOs of growing organisations need a more
sophisticated picture of their business' financial metrics
in order to determine the growth trajectory. No matter 
your industry, every CEO should closely track these financial 
indicators to best navigate their business.

What do you think are other important metrics that must be tracked?

Follow KGMC India on Linkedin for more...

KGMC is a process outsourcing firm based in Gurugram. 
We focus on providing high-quality financial accounting, internal audit, 
reconciliations, payroll outsourcing, and other
financial processes outsourcing services to our clients.

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