Key Takeaway: Revenue is the easiest number to watch and the least complete picture of financial health on its own.
What's on This Page
The Core Financial KPIs
| KPI | Formula |
|---|---|
| Gross Margin % | (Revenue − COGS) ÷ Revenue × 100 |
| Net Margin % | Net Profit ÷ Revenue × 100 |
| Working Capital | Current Assets − Current Liabilities |
| Operating Cash Flow | Cash In − Cash Out (operations only) |
| Break-Even Point | Fixed Costs ÷ (Price − Variable Cost) |
| Days Sales Outstanding | (Receivables ÷ Revenue) × Days in Period |
Reviewing These Together
These numbers are most useful reviewed as a set, not individually. A healthy gross margin alongside negative operating cash flow tells a very different story than either number alone. Download our free Business KPI Checklist to review all of these on one sheet every month.
For further reading, see the SEC's Beginners' Guide to Financial Statements.
Checklist
- Track gross margin percent and net margin percent together
- Track working capital alongside operating cash flow
- Calculate break-even point and revisit it periodically
- Track days sales outstanding to monitor collection speed
- Review all core KPIs as a set, not in isolation
- Use a fixed monthly cadence for this review
Common Mistakes
FAQ
Why isn't revenue enough to judge financial health?
It's the easiest number to watch but the least complete picture on its own, since it says nothing about margin, cash position, or how much is owed.
What core financial KPIs should be tracked together?
Gross margin percent, net margin percent, working capital, operating cash flow, break-even point, and days sales outstanding.
Why review these KPIs together instead of individually?
A healthy gross margin alongside negative operating cash flow tells a very different story than either number reviewed alone.
What does days sales outstanding measure?
How long, on average, it takes to collect payment after a sale, calculated from receivables as a share of revenue.
Calculate This For Your Business
Related Guides in the Finance Academy
- Break-Even Analysis Guide. one of the KPIs in this list, explained in depth
- Cash Flow Guide. the operating cash flow KPI explained fully
- Working Capital Guide. another guide in the Finance Academy