10 Accounting KPIs You Should Know

10 Accounting KPIs You Should Know

1️⃣ Revenue Growth Rate

→ Measures percentage increase/decrease in revenue over a period, indicating ability to generate more sales.

→ Formula: (Current Period Revenue - Previous Period Revenue) / Previous Period Revenue x 100

2️⃣ Net Profit Margin

→ Shows the percentage of revenue remaining as net profit after expenses.

→ Formula: (Net Income / Revenue) x 100

3️⃣ Return on Investment (ROI)

→ Evaluates profitability of an investment by measuring net profit generated compared to the initial investment.

→ Formula: (Net Profit / Initial Investment) x 100

4️⃣ Return on Assets (ROA)

→ Assesses profitability by measuring net income generated from total assets.

→ Formula: (Net Income / Total Assets) x 100

5️⃣ Return on Equity (ROE)

→ Measures profitability of shareholders' equity by assessing net income generated from shareholders' equity.

→ Formula: (Net Income / Shareholders' Equity) x 100

6️⃣ Equity Ratio

→ Shows proportion of total assets financed by shareholders' equity.

→ Formula: Shareholders' Equity / Total Assets

7️⃣ Current Ratio

→ Measures ability to pay short-term obligations, indicating short-term liquidity position.

→ Formula: Current Assets / Current Liabilities

8️⃣ Debt / EBITDA Ratio

→ Assesses ability to manage debt obligations by comparing total debt to (EBITDA).

→ Formula: Total Debt / EBITDA

9️⃣ Debt Service Coverage Ratio (DSCR)

→ Evaluates cash flow to cover debt servicing, indicating ability to meet debt payments.

→ Formula: EBITDA / Total Debt Service

🔟 EBITDA Margin

→ Measures profitability and operating efficiency by assessing the percentage of revenue represented by EBITDA.

→ Formula: (EBITDA / Total Revenue) x 100