Every SME owner should monitor these five key financial metrics to determine their business’s overall health and financial worth. We take a look at what these metrics are and how you can utilise them.

Financial metrics refer to key performance indicators (KPIs) that are used to assess and evaluate the financial performance of your company. These metrics help you understand how well your company is managing its money, whether it is making a profit, and using its resources to achieve its goals.

To run a successful business, or invest in one, it’s important for every business owner to understand the financial metrics listed below.

See also: 7 ways to finance your small business

1. Revenue metrics

Revenue metrics help measure the total amount of money or income a business has made within a certain length of time. 

By using these metrics, you can figure out how much income your business is making and whether that amount is increasing or decreasing. 

Common revenue metrics include:

  • Total revenue
  • Revenue growth rate
  • Average revenue per customer (ARPC)
  • Revenue by product or service

You can use these metrics to make smart decisions about how to price your products or services.

In addition, they can help you understand what products or services to provide your customers, which ones earn you more, and how to promote and sell them efficiently to increase your income and enhance your business results.

2. Profitability metrics

Profitability metrics are tools that businesses use to assess their financial performance. They compare how much money the products or services bring in with how much money they spend in selling the products or services.

Common profitability metrics include:

  • Gross profit margin
  • Net profit margin
  • Return on investment (ROI)
  • Return on assets (ROA)
  • Return on equity (ROE)

3. Cash flow metrics

Cash flow metrics help businesses keep track of how much money is coming in and going out over a certain time period. This metric is vital because if you don’t keep an eye on your cash flow, your business could end up in financial trouble.

These metrics can help you understand how much cash you have available to pay bills and other expenses on time.

Common cash flow metrics include:

  • Operating cash flow (OCF)
  • Free cash flow (FCF)
  • Cash conversion cycle (CCC)
  • Days sales outstanding (DSO)

4. Debt metrics

Debt metrics are financial measures that help businesses evaluate how well they can handle the repayment of any loans.

The following metrics help indicate how financially stable your company is:

  • Debt levels
  • Interest payments
  • Debt repayment capabilities

This information can help you spot any risks that could be caused by debt.

5. Customer metrics

Customer metrics are ways to gauge and grasp how customers connect with a business, what they want, and how pleased they are with the products or services provided. Businesses can use this information to optimise their customer experience and overall results.

The following customer metrics provide valuable insight into how customers behave, what they need, and how content they are:

  • Customer acquisition cost (CAC)
  • Customer lifetime value
  • Customer retention rate
  • Customer satisfaction score (CSAT)

How financial accountants can provide insights into financial metrics

Our small business accounting services can assist you with financial planning and help you understand financial metrics.

We can guide you throughout the entire process, from setting financial goals and creating a budget to developing strategies to achieve those goals.


Do you want your business to thrive? Get in touch with our SME accounting team. Our expert advisers offer essential and beneficial business advisory services to ensure the success of your business. To learn more about monitoring your business’s financial health, contact our experts on  +44 (0) 20 7759 7553 or email accounting@sableinternational.com.

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