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Key Metrics in Financial Reporting

People sitting at a table with report documents

September 7, 2023

All businesses must pay close attention to financial reporting to provide an accurate snapshot of financial health. This can lead to informed data-driven decision-making and help identify areas for improvement as well as opportunities.

The CFO is central to this process, building and leading the finance team and delivering key insights built upon financial reporting. In this article, we will highlight the most important metrics for creating effective financial reports. We will also look at how ERP software can help with all of this so that you can gain the competitive edge you need.

Metrics for Revenue/Profitability

This is crucial to track if you aim to make informed financial decisions.

Gross Profit Margin

This measures the profitability of your products/services, accounting only for the cost of production. If this is low, you may need to rethink your pricing strategy or look for opportunities to lower costs.

Net Profit Margin

Measure your profitability taking all expenses into account, including interest and taxes. You should aim to get a similar profit margin to your competitors, or to beat it.

Earnings Before Interest Tax Depreciation and Amortisation (EBITDA)

Generally speaking, EBITDA is a more commonly-used profitability metric than net profit margins. It measures core profitability by removing non-cash accounting expenses, enabling you to compare your profitability with competitors. This is often used by investors to assess a business’ value, so you should keep track of it.

Revenue Growth Rate

A high revenue growth rate means your revenue is growing at an increased rate over time. This indicates a successful expansion of market share and provides opportunities to invest in more growth.

Customer Lifetime Value (CLV)

This critical metric determines the total value a customer will bring to you over the entire relationship. It accounts for factors like referrals, repeat purchases and loyalty, and can help you allocate resources more effectively to retain valuable customers and acquire new ones. This is particularly important for SaaS businesses.

Customer Acquisition Cost (CAC)

As you might guess, this determines how much it costs to acquire new customers. It is calculated by dividing the total amount spent on sales/marketing by the number of customers acquired over a specified time period. This helps you understand how effective your sales and marketing are.

Metrics for Cash Flow

Cash flow metrics are essential for ensuring liquidity of your business and meeting your short-term obligations.

Operating Cash Flow

This measures cash levels, indicating whether enough is being generated to sustain operations at their current level. If it is negative, you may need to increase sales or cut costs. If it is positive, you will have surplus funds that could be used to invest in growth.

Free Cash Flow

This is all about the amount of remaining cash after paying for capital expenditures. Every CFO should know their company’s cash position for informed decision-making.

Cash Conversion Cycle (CCC)

A metric that measures the time taken to convert inventory into cash. It is an indicator of how efficiently your working capital is being managed. If it is long, it may mean you need to improve inventory management for faster cash generation. Shorter cycles typically indicate better financial health.


Rooted in profit and positive cash flow, productivity means the output you can produce in a given time. Increasing it generally leads to a boost in profits and positive cash flow, and a productivity level of 0.5 is generally regarded as the minimum for survival.

Metrics for Efficiency

Tracking efficiency is essential if you want to improve operational performance and efficiency. These metrics are focused on minimising waste, getting maximum output with minimal resources.

Inventory Turnover

How efficiently are you managing inventory and how quickly are products selling? A low inventory turnover suggests you’re holding excessive inventory, meaning costs are high and you may have outdated products.

Days Sales Outstanding (DSO)

This metric measures how long it takes to collect payment from customers. It is an indicator of the level of efficiency in managing your accounts receivable.

Asset Turnover

How efficiently are you using your assets to generate revenue?

Metrics for Debt and Solvency

You should monitor debt and solvency metrics to ascertain whether your company can survive financial shocks. They are crucial to maintaining financial stability and meeting long-term obligations.

Debt-to-Equity Ratio

This measures how much debt you use to finance operations in relation to equity – essentially, it suggests the level of risk. If it is high, your debt may be excessive.

Interest Coverage Ratio

Use this to measure your ability to pay interest on debts. If this ratio is low, you may need to increase earnings to cover debt payments.

Current Ratio

Short-term obligations must be met, and this measures your ability to do so. Essentially, it looks at whether you have sufficient current assets to cover current liabilities.

Market Metrics

These are essential for understanding your financial performance and how it compares to competitors.

Price-to-Earnings Ratio (P/E)

This measures your stock price relative to earnings per share, indicating whether you are perceived as correctly valued by the market.

Earnings Per Share (EPS)

A financial metric to measure profitability and the value you provide to shareholders. It indicates the net income you earn for each share of stock held by investors.

Market Share

Your market share is your company’s competitive position within your market. It is the percentage of total sales in that market that your company/product holds.

Market Capitalisation

This is your total market value, so it indicates your size in comparison to others. It is calculated by multiplying the current market price of your stock by the total number of outstanding shares.

How can ERP help with tracking key financial metrics?

ERP is loaded with tools for tracking all the metrics in this list and more. It provides trustworthy data from a central source, integrated with advanced reporting, sophisticated analytics and cutting-edge business intelligence. With a high-quality ERP system deployed in your business, you get access to tools like:

  • Machine learning.
  • Automation.
  • Business intelligence.
  • Cloud computing.

All of this allows you to access real-time financial data and create advanced data visualisation and analysis to track all of the above metrics accurately. Ultimately, you will be able to benchmark your financial performance against competitors in fast, efficient ways to maximise your success.

Why Choose Eventura as your ERP Implementation Partner?


Eventura has been providing robust business solutions to countless organisations for over two decades. We are ERP experts and can identify all of your business needs, including issues surrounding supply chain, and deliver a comprehensive ERP solution that works for you.

As Sage 200 Partners and NetSuite Solution Providers, we can help you identify which solution will fit your business needs the best. Our expert team of business analysts, developers, consultants, technicians and support staff can guide you through your entire project, from initial scoping through to implementation and on-going support.

We’re also managed IT service providers meaning we can help you identify your entire IT infrastructure requirements from day one. If you would like to speak to one of our ERP experts to discuss your options or request a free demo, you can request a free call back here.

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