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16 Cash Flow KPIs You Should Know Your Business Success starts with Revenue and ends with Cash Flow. Here are 16 Cash Flow KPIs to Know: 1. Sales Revenue Forecast: 🎯 The revenue you expect to generate y/y from normal business operations (e.g. from sales of products and services) 2. Sales Revenue Budget to Actuals: 🎯 A comparison of the revenues you budgeted for the period against those you actually achieved, typically broken down by product or service line, and including variance analysis 3. Sales Pipeline: 🎯 A list of your current sales opportunities in the process of being closed, together with their individual sales values and their probability of closing during the period. 4. Sales backlog: 🎯 A list of your signed sales deals currently in process of execution (i.e. future revenues) 5. Gross profit: 🎯 The amount of revenue remaining after accounting for your cost of goods sold or cost of sales (COGS/COS). 6. Gross profit margin: 🎯 The percentage of your revenue remaining after accounting for the cost of goods sold or cost of sales. 7. Net profit: 🎯 The amount of revenue remaining after accounting for your cost of goods sold or cost of sales (COGS/COS) as well as your operating expenses (OPEX). 8. Net profit margin: 🎯 The percentage of your revenue remaining after accounting for the cost of goods sold or cost of sales as well as your operating expense. 9. Operating Cash Flow (OCF): 🎯 The amount of cash generated by your ongoing business operations. 10. Financing Cash Flow: 🎯 The amount of cash generated by your financing activities (i.e. borrowing and repaying debt, issuing and repurchasing equity, paying dividends) 11. Investing Cash Flow: 🎯 The amount of cash generated by your investing activities (i.e. PPE, investments in other companies, investments in marketable securities) 12. Days Sales Outstanding (DSO): 🎯 The average number of days you take to collect on outstanding customer (AR) balances 13. Days Inventory Outstanding (DIO): 🎯 Average number of days you take to sell your inventory 14. Days Payable Outstanding (DPO): 🎯 Average number of days you take to settle outstanding supplier (AP) invoices 15. Cash Conversion Cycle (CCC): 🎯 The average number of days it takes you to convert your inventory investment into sales, your sales into receivables and your receivables into cash. 16. Free Cash Flow (FCF): 🎯 Net Income + Interest + Taxes + Depreciation/Amortization +/- Non-Cash Items +/- Changes in Working Capital +/- Changes in Fixed Assets What would you add? ------------------ 💎 𝗝𝗼𝗶𝗻 my free newsletter - The Finance Gem 💎 - get my unabbreviated Linkedin post content and other finance gems delivered straight to your inbox >>(𝗹𝗶𝗻𝗸 𝗶𝗻 my Linkedin profile & below in 𝗰𝗼𝗺𝗺𝗲𝗻𝘁𝘀) ➕ Follow me for more finance, business, and cash flow insights. 🔔 Ring the bell at the top right of my profile so you don't miss out on new posts. #entrepreneur #finance #business
A great list Oana, I would add EBITDA and EBITDA margin and compare it to operating cash flow. positive relationship between EBITDA and operating cash flow suggests that a company's operations are generating enough cash to fund its growth. However, if EBITDA is higher than operating cash flow, it may indicate that the company is struggling to convert its earnings into cash and may be relying on external sources of financing. In summary, EBITDA to operating cash flow tells us how effectively a company is generating cash from its core operations and how successful they are in converting the earnings into cash.
Oana Labes, MBA, CPA great list and all important metrics. May I ask if we have 16 items to track how are those KPIs? Would they not all be metrics and then the 3-5 most important ones for a business would be KPIs. This to me would be overload if we track all these as KPIS but maybe I am missing something. In my mind it is an important distinction to call out as KPIs imply they are all key and if we have 16 cash flow we would have probably 100 KPIs by time we are done which is information overload at least it would be for my brain :) Thanks for sharing and again great list.
Oana, 💡Knowledge is power! These 16 cash flow KPIs are a must-know for any business owner. 💰 Understanding these key indicators will help you make informed decisions to ensure a healthy cash flow. 🔍 Stay ahead of the game by keeping a close eye on these metrics and always aiming for improvement. 💪 Let's make those cash registers ring! 💰 #CashFlowKPIs #BusinessSuccess #Revenue #NetProfit #OperatingCashFlow #FinancingCashFlow #InvestingCashFlow #DSO #DIO #DPO #CCC #FreeCashFlow #FinancialManagement #Entrepreneurship
NP/NPM are not CF KPIs
Thanks for sharing. May be one or two key watch out for each KPI would be plus
Oana Labes, MBA, CPA This is a great set of cash flow metrics. And, I agree with Nicolas Boucher that you can only manage what you measure. Often, it can also be true that "What you measure gets better." All good things. Nonetheless, too many meters and dials can be distracting if not overwhelming. If you had to select some few truly "Key" indicators, which would they be for you? Or, is the critical subset situational - depending on the unique business situation in front of you?
You can only manage what you measure. If you know these KPIs and follow them, you have more chances to activite the levers to optimize your cash!
Helpful and healthy information
Great list. I would add the burn rate and cash runway for a holistic view of a startup’s cash resources.
Empowering CEOs & CFOs with Automated Business Intelligence | Enabling Business Leaders Worldwide to compound their Impact & Influence with Strategic Finance Tools, Talks and Education | Top Linkedin Content Creator
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