What is KPI of Finance management?

Gross profit is one key measure to the success of the organisation. Research shows that survival rates are linked to levels of gross profit; gross profit margins above that of the competition provide clear evidence of competitive advantage.

Return on capital employed is another key measure of the success of the organisation. The ability to use investment effectively is central to effective long term development.

Break-even rate. Each employee of the firm has his or her own break-even cost, which represents the actual cost of each person’s employment. It’s equal to the overhead rate plus each person’s hourly salary, represented by the unit of 1.0.

Profit-to-earnings ratio. The profit-to-earnings ratio is determined by dividing the profit (before distributions and taxes) by the net operating revenue. It indicates a firm’s effectiveness in completing projects profitably.

Cash flow. Cash flow is a measure of how much money the firm actually has on hand at any given time to pay accounts payable. While a firm may appear to be profitable on paper, cash flow can be a serious challenge for professional service firms and can adversely affect the ability of a firm to meet its financial obligations to employees, vendors, and consultants in a timely manner.