Business Performance

Whether you are able to meet your company objectives represents the difference between success and failure. Understanding your progress in meeting these objectives depends on having clear overview of your business performance.

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Performance monitoring in business lends the upper hand

Long-term growth and success are every business’s dream. One proven way to drive profitability is by monitoring and tracking business performance by studying key performance indicators in terms of achieving goals and objectives. Doing this unfolds an overview of your revenue growth, profitability, and operational efficiency and helps you take the necessary steps to perform better.

Here’s why you must monitor business performance

Monitoring business is essential if you want to make improvements in operations, take better decisions and stay on top of the competitive business landscape. Here are the top reasons you should regularly monitor and track business performance:

Identifying areas for improvement

Monitoring KPIs helps you gauge where your business is underperforming and how you can take action to increase profitability.

Making data-driven decisions

By analyzing KPIs, you can gain insights into trends and patterns, which will eventually help you make informed decisions on strategy, operations, and resource allocation.

Stay competitive

By understanding market trends, customer behavior, and competitor performance, you can establish a dominant market position and quickly adapt to changing market conditions.

Motivated to boost your bottom-line growth?

Tracking business performance can be a time-consuming task. To get it right, you need to use advanced tools. With that, here are the steps to effectively monitor business performance:

What financial metrics reflect true business performance?

You can use several financial metrics to review and evaluate your company’s financial performance and to achieve goals and objectives. To monitor business performance, let’s take a look at some of the core financial metrics you should be tracking:

Metrics

Explanation

Revenue

To measure how much money your business operations generate.

Gross Profit Margin

To measure the percentage of revenue your business retains after subtracting the cost of goods sold.

Operating Profit Margin

To measure the profitability of your business operations after subtracting all operating expenses, excluding interest and taxes.

Net Profit Margin

To measure the percentage of revenue your business retains after subtracting operating expenses, including the cost of goods sold, operating expenses, and taxes.

Return on Assets (ROA)

To measure the efficiency with which your business uses its assets to generate profit.

Current Ratio

To measure your business's ability to pay short-term obligations like accounts payable and short-term debt.

Quick Ratio

Similar to the current ratio, the quick ratio excludes inventory from the calculation. It measures how well your business is equipped to pay short-term obligations.

Interest Coverage Ratio

To measure your business's ability to pay interest expenses on any debt it has incurred.