Top Financial Metrics Every Small Business Should Track with a Fractional CFO

TOP FINANCIAL METRICS EVERY SMALL BUSINESS SHOULD TRACK WITH A FRACTIONAL CFO

As a small business owner, tracking financial metrics is critical to ensuring the health and growth of your business. Financial metrics can help you understand the performance of your business and make informed decisions. In this blog, we will explore the top financial metrics every small business should track with a fractional CFO.

Gross Profit Margin
Gross profit margin is the percentage of revenue that exceeds the cost of goods sold. It is a critical financial metric that measures a business’s profitability. A high gross profit margin indicates that a business is selling its products or services at a profitable price.

Net Profit Margin
Net profit margin is the percentage of revenue that remains after all expenses are deducted. It is a measure of a business’s overall profitability. A high net profit margin indicates that a business is operating efficiently and effectively.

Cash Flow
Cash flow measures the amount of cash coming in and going out of a business. It is a critical financial metric that helps businesses manage their finances effectively. A positive cash flow indicates that a business has enough cash to pay its bills and invest in future growth.

Accounts Receivable Turnover
Accounts receivable turnover measures the number of times a business collects its accounts receivable during a given period. It is a critical financial metric that measures how quickly a business collects its outstanding invoices. A high accounts receivable turnover indicates that a business is collecting its payments quickly, which can help improve cash flow.

Inventory Turnover
Inventory turnover measures how quickly a business sells its inventory during a given period. It is a critical financial metric that measures a business’s efficiency in managing inventory. A high inventory turnover indicates that a business is selling its inventory quickly and efficiently, which can help improve cash flow and profitability.

Return on Investment

Return on investment (ROI) measures the return on an investment relative to the investment’s cost. It is a critical financial metric that measures a business’s financial performance. A high ROI indicates that a business is generating a significant return on its investments.

Conclusion
In conclusion, tracking financial metrics is essential for the success of any small business. By tracking financial metrics like gross profit margin, net profit margin, cash flow, accounts receivable turnover, inventory turnover, and return on investment, businesses can gain valuable insights into their financial performance and make informed decisions. By working with a fractional CFO, businesses can gain access to financial expertise and guidance, enabling them to track and improve their financial metrics more effectively. Call us now to speak to one of our experts at LS CFO Advisors at 844-LS-CFO-00 or 844-572-3600 to learn more.