About This Chapter
KPIs in Financial Management - Chapter Summary
Help your organization's supervisors review financial management key performance indicators (KPIs) with this self-paced corporate training chapter. The chapter includes expertly taught lessons that show supervisors the basics of:
- Net profit
- Gross/net profit margins
- Total revenue
- Return on investment
- The cash conversion cycle
- Financial ratios
Supervisors can practice using the chapter's formulas by taking the included lessons quizzes and chapter exam. Our instructors are also available to answer any questions your supervisors may have about financial management KPIs.
How It Helps
- Builds awareness: Supervisors will become more aware of metrics that are used to measure organizational finances.
- Highlights important financial formulas: The chapter shows supervisors formulas for calculating metrics like net profit, gross profit, total revenue, return on investment and more.
- Improves financial skills: Supervisors who study the chapter will improve their ability to make financial calculations and measure financial KPIs.
By the end of the chapter, your company's supervisors should be able to:
- Identify common financial metrics that are used in business
- Make net profit calculations
- Calculate gross and net profit margins
- Define the concept of total revenue in economics
- Use the formula for calculating a return on investment
- Explain the cash conversion cycle
- Analyze/use activity, profitability, liquidity and solvency ratios
1. Common Financial Metrics Used in Organizations
There are many financial metrics managers and investors can use to understand the financial health of an organization. In this lesson, we'll learn some of the most common metrics that most people in an organization can use and understand.
2. Net Profit: Definition & Calculation
In this lesson, you will learn about net profit. You will learn the definition of net profit, how it is calculated, and see an example of how it relates to everyday life.
3. How to Calculate Net Profit Margin: Definition & Formula
This lesson discusses the importance of the net profit margin. The formula is explained and an example is provided that walks through the steps of calculating net profit margin.
4. How to Calculate Gross Profit Margin: Definition & Formula
In this lesson, you'll learn the purpose of calculating gross profit margin and explore its components. You'll also learn how to analyze the results of the calculation.
5. Total Revenue in Economics: Definition & Formula
Learn what total revenue is and why it is important to understand. Discover the formula to calculate total revenue and find out how you can maximize your total revenue in business.
6. Return on Investment: Definition, Formula & Example
Return on investment is a crucial analytical tool used by both businesses and investors. In this lesson, you'll learn the basic formula, discover a variant used for shareholders, and be provided examples.
7. The Cash Conversion Cycle: Definition, Formula & Example
This lesson will introduce you to the cash conversion cycle. it will be defined and a formula for its calculation is presented and explained. Finally a full illustration of the calculations is presented.
8. Activity Ratios: Definition, Formula & Analysis
Businesses need to know how soon they can convert their assets into cash. They use activity ratios to figure it out. In this lesson, you'll learn the definition of activity ratio, as well as about some common types.
9. Profitability Ratio: Definition, Formula, Analysis & Example
How do you know if a company is performing well? In this lesson, you'll learn about various profitability ratios, including what they mean, their formulas and examples illustrating them. A short quiz follows the lesson.
10. Liquidity Ratio: Definition, Calculation & Analysis
The financial stability of a company can be tested in many ways. One of the quickest ways to see just how well a company is performing is to use financial ratios. In this lesson, you will learn what liquidity ratios are, how to calculate them, and how to interpret them.
11. Using Liquidity Ratios & Formulas in Financial Analysis
In this lesson, we'll define liquidity and discuss three financial ratios to determine a company's liquidity: current, quick and operating cash. You'll also learn how to calculate and analyze the ratios.
12. Analyzing Financial Statements using Solvency Ratios
In this lesson, we'll define solvency and learn about three solvency ratios: debt, equity, and debt to equity.We'll also learn how to analyze each ratio and determine if a high or low ratio is positive or negative.
Earning College Credit
Did you know… We have over 95 college courses that prepare you to earn credit by exam that is accepted by over 2,000 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.
To learn more, visit our Earning Credit Page
Transferring credit to the school of your choice
Not sure what college you want to attend yet? Study.com has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.