Business Management & Key Performance Indicators (KPI)
Business Management is a very broad area. One of the key components of Business Management is the compiling and understanding of financial statements. Using Key Performance Indicators (KPI) is a vital part of successful Business Management.
We will meet with you monthly, quarterly, and / or bi-annually to discuss your trading results and matters of importance which you need to be aware of for the effective operation of your business. We will help you interpret your periodic reports, examining your KPI’s and examine your operation.
KPI are a critical tool in measuring your business performance. It is important that the your KPI are:
- Relevant; and
- Time Frame, is put in place.
KPI is essentially a performance measurement. A KPI is a metric typically used on a business to assist on measuring its performance.
Popular KPI for accounting and financial management include:
Revenue Growth: This is a measurement of how well an organisation grows its fee / sales base. It is calculated by taking the difference between the current sales amount to the previous sales amount and dividing by the previous sales amount.
Gross Margin %: Gross margin is net sales less the cost of goods sold. Generally selling and administration expenses are disregarded. The gross margin percentage is calculated as (Net sales – Cost of goods sold) / Net sales.
Overhead %: Can be calculated as total overheads / total revenue.
EBIT %: Can be calculated and earnings before interest and tax (EBIT) / revenue.
EBITDA: Earnings before interest and tax / (EBIT) + Depreciation & Amortisation.
Net Profit %: Net profit after tax / revenue.
Calculation of Break Even Margin / Point
Understanding your business performance and financial position
If you would like to discuss further please contact us:
McNamara and Co - Chartered Accountants, located minutes from the Melbourne CBD
Phone +61 3 9428 1062
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