Part 2 Measuring and understanding your financial performance
1. Revenue growth rate – The rate at which you are increasing your company’s income
2. Net profit – Income minus expenses – the bottom line, but certainly not the only metric you need to worry about!
3. Net profit margin – The percentage of your revenue which is net profit.
4. Gross profit margin – The percentage of your revenue which is gross profit (the profit generated for each dollar of sales)
5. Operating profit margin – Operating income divided by revenue – another measure of a company’s profitability.
6. Return on investment (ROI) The revenue generated by investing money into an aspect of a company’s operations, in relation to the cost of that investment.
7. Cash conversion cycle (CCC) – How long does it take for money invested in the business (for stock etc) to come back to the company in the form of increased revenue.