Top Ten Metrics and Ratios for Small Business Owners to Track
Net Profit Margin = Net Profit ÷ Revenue
Measures how much profit you retain from each dollar of revenue.
Cash Flow Margin Ratio / Profitability Ratio = Operating Cash Flow ÷ Net Sales
Measures how efficiently you are generating cash from operations.
Gross Profit Margin = (Revenue - COGS) ÷ Revenue
Reveals how efficiently you deliver your product/service.
Customer Acquisition Cost (CAC) = Sales & Marketing Costs ÷ New Customers Acquired
Helps measure marketing/sales ROI.
Customer Lifetime Value (CLTV or LTV) = Average Purchase Value × Purchase Frequency × Customer Lifespan
Measures how much value each customer brings over time.
Accounts Receivable Turnover = Net Credit Sales ÷ Avg. Accounts Receivable
Measures how quickly you're collecting on invoices.
Burn Rate = Monthly Operating Expenses - Monthly Revenue (only if expenses > revenue)
Shows how fast you're using cash reserves.
Inventory Turnover = COGS ÷ Average Inventory
Tells you how efficiently you're managing inventory.
Debt to Equity Ratio = Total Liabilities ÷ Equity
Shows how leveraged the business is compared to how much equity there is.
Operating Expense Ratio = Operating Expenses ÷ Revenue
Measures what percentage of revenue goes to overhead.