Financial indicators: Which metrics to analyze to be more efficient

In order for your business to have sufficient and effective input for good planning and management, you must first have an efficient financial management. This means having the financial indicators analyzed by your team easily, allowing you to be able to study the current scenario and make the right decisions for the future of the company.

The success of the business, therefore, depends on a series of sectors, but certainly, finance is the heart of the company, that pumps the oxygen so that all the others can work in a healthy way. Only a structured analysis of their financial indicators ensures that the results obtained correspond to what managers expect from the business.

Want to know more about which metrics matter, how to intelligently use them, and apply the technology to them?

What are financial indicators?

Financial indicators are metrics that collect your company information so that you can analyze the efficiency of the actions taken by all departments of the company. They have the role of providing data to aid in decision making.

An example of this analysis is the number of sales of a business: it does not make much sense without an evaluation of other data involved in this operation: the financial indicators, which will show if there was liquidity and profit from sales.

Which indicators should be analyzed by the company?

Depending on the type of company, there is a number of metrics that must be analyzed by the industry so that the expected results are achieved. Among them are the liquidity, cash flow, and contributing margin indexes. Let’s dive into the main ones:

Operating margin

It determines the profitability of the business, allowing the evaluation of how much was sold, how much money was invested in the operation and comparing its performance with different periods. The operating margin indicates the percentage of money obtained in relation to expenses and taxes.

Interest rate

The interest coverage checks the indebtedness and the capacity that the company has to pay its debts with the cash flow. It shows if the business manages to pay contract interest, without compromising the company’s cash flow.

Break-even point

This is one of the most important financial indicators of a company, because it indicates if the planning to have no losses can be applied. This index shows how much you should sell not to stay in the negative.

Return on Investment

ROI – return on investment – gives you the exact measure of how much you will get back on everything you’ve invested in your particular business. It can be applied both to the company as a whole and to specific projects -?marketing campaigns, surveys, purchase of equipment, among others.

How to use them more efficiently?

It?s critical, if you are to get all the?financial metrics?that are important to your business, that you use technology to your advantage. There are resources that can be used to optimize these processes, such as software and management systems, that help you save?time?so you can use it in more strategic areas.

Management platforms, such as ERPs, help in the process of analyzing metrics and make your financial control more dynamic, enabling more accurate decision making.

There are a number of other financial indicators that can be analyzed, according to the business segment and the strategic objectives of the company. Among them are gross sales, profitability, average ticket, fixed costs, level of indebtedness, among others.

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