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What are key figures?
How important are key figures for a company?
Why are key figures important?
Which financial indicators do companies need to know if their business is growing?
The formulas for the most important key figures look as follows: Return on capital employed: RETURN BEFORE TAX AND FINANCING CHARGES / NET ASSETS (CAPITAL EMPLOYED) * 100. Return on equity: RETURN AFTER TAX AND FINANCING CHARGES / EQUITY * 100. Profit margin: RETURN BEFORE TAX AND FINANCING CHARGES / REVENUE * 100. Contribution ratio:
- Return on equity and on capital employed. The return on equity measures how much interest the capital employed (the money invested in operating the business) carries.
- The profit margin. The profit margin is calculated by determining the profit as a percentage of the revenues. It reveals whether a company is good at adjusting its costs in respect to its income.
- The contribution margin. The contribution margin allows a company to see whether the remaining revenues can cover the fixed costs. If the contribution margin is high, the company has had few variable costs (costs that change with changes to the service or product).
- Customer and supplier turnover ratios. The customer turnover ratio (also known as the accounts receivable ratio) measures how quickly a company’s customers pay their invoices.
- Gross Profit Margin. Gross profit margin is a profitability ratio that measures what percentage of revenue is left after subtracting the cost of goods sold.
- Net Profit Margin. Net profit margin is a profitability ratio that measures what percentage of revenue and other income is left after subtracting all costs for the business, including costs of goods sold, operating expenses, interest, and taxes.
- Working Capital. Working capital is a measure of the business’s available operating liquidity, which can be used to fund day-to-day operations. Working Capital = Current Assets - Current Liabilities.
- Current Ratio. Current ratio is a liquidity ratio that helps you understand whether the business can pay its short-term obligations—that is, obligations due within one year— with its current assets and liabilities.
Short term: liquidity. Medium-term: profitability. Long-term: soundness or strength of the balance sheet. In most cases, a few key figures from these three areas alone, depending on the company, are enough to monitor the course of business. Make sure you really understand these figures yourself.
1. 2. 3. 4. 5. 6. 7. 8. 9. Share. Save. 163 views 10 months ago #liquidity #profitability #solvency. A whiteboard animation for key figures concerning liquidity, solvency, and profitability for...
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Key figures are essential indicators of a company’s state, but which key figures are actually important and how can the key figures be interpreted to make a company’s operation more effective? With this training you will get a wide variety of ways to analyze your company’s key figures accurately.
Dec 18, 2023 · What Are the Basic Accounting Principles? Some of the most fundamental accounting principles include the following: Accrual principle. Conservatism principle. Consistency principle. Cost...
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