(What they are and how to measure). Decisions Communication Comparison Priorities.

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Presentation transcript:

(What they are and how to measure)

Decisions Communication Comparison Priorities

Personnel Performance Management Public Company Stock Market Departments

Usage Predictive Forecasting

Management Other Companies IT Staff

Who should determine the appropriate KPI’s for a company?

Where to get KPIs Developed Given Participation Discovery Commitment Belief Full Adoption Longevity Quick Pre-defined IT can manage Save time and effort Some Adoption Short lived

Stakeholders Employees

Cash Flow Indicators Debt Asset Management Market Value

Asset Coverage Ratio Capitalization Ratio Debt Service Coverage Ratio DEBT Debt Ratio Debt-to- Equity Ratio

Debt-to- Income Ratio Debt/EBITDA Ratio Financial Leverage DEBT Equity Multiplier Fixed Assets to Net Worth

Fixed Charge Coverage Ratio Interest Coverage Ratio (ICR) DEBT Long Term Debt to Capitalization Ratio

Acid-Test Ratio Cash Ratio Net Working Capital LIQUIDITY Current Ratio Quick Ratio

Working Capital Working Capital Ratio LIQUIDITY

Cash Return on Capital Invested (CROCI) DuPont Formula EBIT (Earnings Before Interest and Taxes) FINANCIAL Earnings Before Interest After Taxes (EBIAT) EBITDA

EBITDARM EBT (Earnings Before Tax) Gross Profit Margin FINANCIAL Effective Rate of Return Net Profit Margin

NOPLAT (Net Operating Profit Less Adjusted Taxes) OIBDA Operating Margin FINANCIAL Operating Expense Ratio Overhead Ratio

Profit Analysis Profitability Index Return On Assets (ROA) FINANCIAL Relative Return Return on Average Assets (ROAA)

Return on Average Capital Employed (ROACE) Return on Average Equity (ROAE) Return on Debt (ROD) FINANCIAL Return On Capital Employed (ROCE) Return On Equity (ROE)

Return On Invested Capital (ROIC) Return on Investment (ROI) Return on Research Capital (RORC) FINANCIAL Return on Net Assets (RONA) Return on Retained Earnings (RORE)

Return on Revenue (ROR) Return On Sales (ROS) FINANCIAL Revenue per Employee

Accounts Payable Turnover Ratio Asset Turnover Days Payable Outstanding (DPO) ASSET MANAGEMENT Cash Conversion Cycle (Operating Cycle) Days Sales Outstanding (DSO)

Defensive Interval Ratio (DIR) Fixed Asset Turnover Receivable Turnover Ratio ASSET MANAGEMENT Inventory Turnover

Cash Flow Coverage Ratio Cash Flow Management Free Cash Flows / Operating Cash Flows Ratio CASH FLOW INDICATOR Cash Flow Return on Investment (CFROI) Price / Cash Flow Ratio

Business Valuation Dividend Payout Ratio Dividend Yield MARKET VALUE Dividend Policy Ratios Enterprise Value (EV)

Enterprise Value Multiple EV/EBITDA ratio Loan-to-Value Ratio (LTV) MARKET VALUE Gordon Growth Model Net Asset Value per Share (NAVPS)

PEG ratio Price to Earnings Ratio (P/E Ratio) Price/Book Value Ratio MARKET VALUE Price-to- Research Ratio

Pick the right ones for your business

Gartner /EBRC KPI Initiative AICPA KPMG, Deloitte, PWC

All are valid… Narrow the focus… 3 are important From Sales to Professional Services Approximately 30 Measures Found

Top 3 Take-Aways

questions? final thoughts?