Finance & Accounting KPIs: Definitions and Formulas
Finance and accounting KPIs turn revenue, cost, cash, liquidity, receivables, and payables into a consistent view of financial health. Every KPI page explains the calculation, a fictional example, interpretation guidance, limitations, and related measures.
Revenue & Profitability
Connect sales and income with margin, growth, contribution, and the capacity of the business to create value.
Total Revenue
Total income generated from all business activities over a specific period.
Definition and formulaGross Profit Margin
Percentage of revenue remaining after deducting the cost of goods sold (COGS).
Definition and formulaNet Profit Margin
Percentage of revenue remaining after all expenses, taxes, and costs.
Definition and formulaOperating Profit Margin
Percentage of revenue remaining after operating expenses.
Definition and formulaRevenue Growth Rate
Rate at which revenue increases over a specific period.
Definition and formulaEBITDA
Earnings before interest, taxes, depreciation, and amortization.
Definition and formulaReturn on Sales (ROS)
Percentage of revenue converted into operating profit.
Definition and formulaBreak-Even Point
The revenue needed to cover all costs and begin generating profit.
Definition and formulaRevenue per Employee
Average revenue generated per employee.
Definition and formulaProfit per Customer
Average profit generated per customer.
Definition and formulaExpense & Cost Management
Track the operating, production, payroll, overhead, and unit costs that shape financial performance.
Operating Expense Ratio (OER)
Percentage of revenue spent on operating expenses.
Definition and formulaCost of Goods Sold (COGS)
Direct costs of producing goods or services sold by the company.
Definition and formulaTotal Operating Costs
Total expenses incurred in running day-to-day operations.
Definition and formulaBudget Variance
Difference between planned budget and actual expenses.
Definition and formulaCost Savings Achieved
Total savings realized from cost reduction initiatives.
Definition and formulaOverhead Cost Percentage
Percentage of total revenue spent on overhead costs.
Definition and formulaPayroll-to-Revenue Ratio
Percentage of revenue spent on payroll expenses.
Definition and formulaCost Per Unit
Average cost to produce or acquire one unit of a product or service.
Definition and formulaVariable Cost Ratio
Percentage of revenue spent on variable costs.
Definition and formulaFixed Cost Coverage Ratio
Measures the company’s ability to cover fixed costs with revenue.
Definition and formulaLiquidity & Cash Flow
Assess short-term resilience, cash generation, working capital, and the speed with which operations turn into cash.
Current Ratio
Measures the company’s ability to pay short-term liabilities with short-term assets.
Definition and formulaQuick Ratio (Acid-Test Ratio)
Measures the ability to pay short-term obligations without relying on inventory.
Definition and formulaCash Conversion Cycle (CCC)
Time it takes to convert inventory into cash flows from sales.
Definition and formulaOperating Cash Flow (OCF)
Cash generated from regular business operations.
Definition and formulaFree Cash Flow (FCF)
Cash remaining after capital expenditures.
Definition and formulaCash Flow Coverage Ratio
Measures the company’s ability to cover liabilities with cash flow from operations.
Definition and formulaCash Flow to Revenue
Proportion of revenue generated as cash.
Definition and formulaWorking Capital Ratio
Measures liquidity and operational efficiency.
Definition and formulaDebt-to-Cash Flow Ratio
Compares total debt to operating cash flow.
Definition and formulaDays Cash on Hand
Measures how many days the company can operate with its available cash.
Definition and formulaAccounts Receivable & Payable
Monitor how efficiently invoices are collected, supplier obligations are settled, and working-capital processes operate.
Days Sales Outstanding (DSO)
Average number of days it takes to collect payment after a sale.
Definition and formulaAccounts Receivable Turnover Ratio
Measures how efficiently receivables are collected during a period.
Definition and formulaAverage Collection Period
Average time it takes to collect receivables.
Definition and formulaBad Debt Ratio
Percentage of receivables written off as bad debts.
Definition and formulaDays Payable Outstanding (DPO)
Average number of days the company takes to pay its suppliers.
Definition and formulaAccounts Payable Turnover Ratio
Measures how quickly the company pays its suppliers.
Definition and formulaAverage Payment Period
Average time taken to settle accounts payable.
Definition and formulaCash Conversion Efficiency (CCE)
Measures the efficiency of converting sales into cash.
Definition and formulaInvoice Processing Cost
Average cost incurred to process an invoice.
Definition and formulaPayment Error Rate
Percentage of errors in payments made to suppliers.
Definition and formulaTurn metric definitions into answers your team can use.
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