What Financial Metrics Should Business Leaders Monitor?
Monitoring the right financial metrics is crucial for ensuring profitability. Some key metrics include:
Gross Profit Margin: This indicates how well a company is generating revenue relative to its cost of goods sold. Net Profit Margin: This shows the percentage of revenue that remains as profit after all expenses are deducted. Return on Assets (ROA): This measures how effectively a company is using its assets to generate profit. Return on Equity (ROE): This metric indicates how well a company is using shareholders' equity to generate profit. Operating Cash Flow: This shows the cash generated from operational activities, which is crucial for maintaining liquidity.