Key Financial Metrics

Your Business Should Be Tracking

Do you know how to track the financial health of your business?

Keeping a close eye on a few key financial metrics can help you understand how the business is performing, where pressure may be building and whether your financial position is moving in the right direction.

Here are five core financial metrics worth tracking.

1. Revenue Growth

Revenue is more than just your total sales figure.

Tracking monthly revenue growth can help identify seasonal trends, changes in demand and the impact of pricing adjustments.

It also provides a useful starting point for assessing whether the business is growing at a rate that keeps pace with increasing costs and overheads.

2. Operating Expenditure

Operating expenditure, or OpEx, covers the ongoing costs of running the business.

Monitoring these costs closely can help identify where spending is increasing and whether rising expenses are starting to place pressure on margins.

Regular review can also highlight opportunities to reduce unnecessary costs, renegotiate supplier terms or improve operating efficiency.

3. Cashflow and Cash Runway

Cashflow shows how much cash is moving into and out of the business.

Net cashflow provides a clear view of whether the business is generating or consuming cash, while cash runway gives an indication of how long current cash reserves could support ongoing operations.

This is important because cash is what funds supplier payments, tax liabilities, wages, superannuation and other day-to-day commitments.

4. Debt, Equity and Serviceability

Borrowings can be an important source of funding, but they also create ongoing repayment obligations.

Monitoring total liabilities against owner equity, together with interest and repayment commitments, can help assess whether debt levels remain manageable.

The key measure is not simply how much debt the business carries, but whether it can comfortably service that debt from operating cashflow.

5. Gross and Net Profit Margins

Revenue alone does not always provide a clear picture of financial performance.

Gross profit margin shows the percentage of revenue remaining after direct costs, while net profit margin shows what remains after all operating expenses have been taken into account.

Tracking both over time can help identify changes in pricing, cost pressures and overall profitability.

Tracking the Financial Metrics That Matter

These five metrics provide a useful foundation for monitoring the financial health of a business.

Reviewed together, they can help identify emerging issues, improve financial visibility and support better business decisions.

Modern accounting systems such as Xero and MYOB make it easier to access this information, but the real value comes from reviewing the numbers consistently and understanding what is driving the changes.

Contact Us

Interested in improving the financial visibility of your business? Speak with a member of the PRATT Partners team to discuss the key metrics that matter most to your business.