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Financial metric to measure your company health

There are obviously so many different KPIs, ratios, etc that tell the state of things. But if you were to pick one metric that best measures your company's health and one metric only, which metric is it? Which one you pay the most attention to?

Would love to hear your thoughts as we're considering one we can implement into our overall Company goals for the year.

Answers

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Since cash is king, I use Current/Quick Ratio.

It ultimately measures the entire cycle, revenues, expenses, debt servicing, etc.

But ( you knew that was coming), one shouldn't just use one KPI because depending on your business model there are other KPI's that can be used to measure whether you can hit your targets that go into revenues, expenses, capital expenditures, debt servicing, etc.

Think of the advice Peter Drucker gave about budgeting... (I'll modify to fit the answer); too many KPI's and you can't track, too few and you don't get the whole picture, so you need to choose the right number of KPI's!

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