{"id":9818,"date":"2023-07-11T09:00:00","date_gmt":"2023-07-11T13:00:00","guid":{"rendered":"https:\/\/www.sage.com\/en-ca\/blog\/?p=9818"},"modified":"2023-07-07T10:31:55","modified_gmt":"2023-07-07T14:31:55","slug":"key-metrics-cfo-financial-reporting","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-ca\/blog\/key-metrics-cfo-financial-reporting\/","title":{"rendered":"Key metrics every CFO should track for financial reporting"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--has-illustration entry-header--has-illustration--generic\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-ca\/blog\/category\/money-matters\/\" class=\"entry-header__link\">Money Matters<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\tKey metrics every CFO should track for financial reporting\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<p class=\"entry-header__description\">\n\t\t\t\t\t\t\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2023-07-11T09:00:00-04:00\">July 11, 2023<\/time><\/span><span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"Key metrics every CFO should track for financial reporting\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-ca\/blog\/key-metrics-cfo-financial-reporting\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n<\/header>\n\n\n<div class=\"wp-block-post-author\">\n\t\t\t<div class=\"co-authors\">\n\t\t\t\n\t\t<div class=\"entry-author-wrapper\">\n\t\t\t<a class=\"entry-author\" href=\"https:\/\/www.sage.com\/en-ca\/blog\/author\/asavinwattanajantra\/\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"40\" height=\"40\" src=\"https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2026\/03\/Asavin-350x350.jpg\" class=\"entry-author__image\" alt=\"Asavin\" srcset=\"https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2026\/03\/Asavin-350x350.jpg 350w, https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2026\/03\/Asavin-768x768.jpg 768w, https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2026\/03\/Asavin-810x810.jpg 810w, https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2026\/03\/Asavin.jpg 1000w\" sizes=\"auto, (max-width: 40px) 100vw, 40px\" \/>\t\t\t\t<span class=\"entry-author__name\">Asavin Wattanajantra<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t<\/div>\n\t\t<\/div>\n\n\n\n<p class=\"\">Financial reporting is critical to any business, giving a clear picture of your financial health. It helps to inform your decision-making and identify areas for opportunity and improvement.<\/p>\n\n\n\n<p class=\"\">As a CFO, you\u2019ll be at the heart of this process, critical in building and leading your finance team that can provide valuable insights and guidance with the help of reporting.<\/p>\n\n\n\n<p class=\"\">This article will highlight key metrics you might want to track to create effective financial reports. <\/p>\n\n\n\n<p class=\"\">We\u2019ll also examine how benchmarking can help you compare the performance of your business with the competition.<\/p>\n\n\n\n<p class=\"\">Here\u2019s what we cover:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"#revenue\">Revenue and profitability metrics<\/a><\/li>\n\n\n\n<li><a href=\"#cash\">Cash flow metrics<\/a><\/li>\n\n\n\n<li><a href=\"#efficiency\">Efficiency metrics<\/a><\/li>\n\n\n\n<li><a href=\"#debt\">Debt and solvency metrics<\/a><\/li>\n\n\n\n<li><a href=\"#market\">Market metrics<\/a><\/li>\n\n\n\n<li><a href=\"#think\">Think of the metrics relevant to your industry<\/a><\/li>\n\n\n\n<li><a href=\"#unlocking\">Unlocking insights: Benchmarking in metric analysis<\/a><\/li>\n\n\n\n<li><a href=\"#how\">How can technology help with benchmarking?<\/a><\/li>\n\n\n\n<li><a href=\"#final\">Final thoughts on CFO metrics<\/a><\/li>\n<\/ul>\n\n\n\n<p class=\"\"><div class=\"single-cta\">\n\t<a\n\t\tclass=\"button button--primary gate-5e10d568-37d6-4477-a96d-5d7493577a01\"\n\t\trole=\"button\"\n\t\tdata-button-location=\"content_area\"\n\t\thref=\"#gate-5e10d568-37d6-4477-a96d-5d7493577a01\"\n\t>Download your free copy of Managing modern finance in a time of unprecedented change<\/a>\n<\/div>\n<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"revenue\">Revenue and profitability metrics<\/h2>\n\n\n\n<p class=\"\">Tracking revenue and profitability metrics is critical if you\u2019re looking to make informed financial decisions, measure your performance over time, and identify areas where you can improve.<\/p>\n\n\n\n<p class=\"\">Here are some examples of revenue and profitability metrics you\u2019ll want to keep a close eye on:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Gross profit margin<\/h3>\n\n\n\n<p class=\"\">Gross profit margin measures the profitability of a company\u2019s products or services after accounting for only the direct cost of producing those products or services. <\/p>\n\n\n\n<p class=\"\">A low gross profit margin may push you to adjust your pricing strategy or reduce costs to improve profitability.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Net profit margin<\/h3>\n\n\n\n<p class=\"\">Net profit margin measures profitability after accounting for all expenses, including taxes and interest.<\/p>\n\n\n\n<p class=\"\">Melissa Houston, Certified Public Accountant (CPA) and founder of the business podcast <a href=\"https:\/\/shemeansprofit.com\/\" rel=\"noopener noreferrer\">She Means Profit<\/a>, says: \u201cThe higher the net profit margin is, the more profit your business will make. <\/p>\n\n\n\n<p class=\"\">\u201cYou want to ensure your net profit margin is consistent or higher than your competitors.\u201d<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Earnings before interest tax depreciation and amortization (EBITDA)<\/h3>\n\n\n\n<p class=\"\">Although knowing your net profit margin is useful, Ben Brading, CPA and founder of comparison site <a href=\"https:\/\/www.aquaswitch.co.uk\/\" rel=\"noopener noreferrer\">AquaSwitch<\/a>, points out that earnings before interest tax depreciation and amortization (EBITDA) is a more common profitability metric used in the real world.<\/p>\n\n\n\n<p class=\"\">Ben says: \u201cEBITDA measures the core profitability of a business by stripping out non-cash accounting expenses like depreciation and amortization and non-operational expenses of interest and tax.<\/p>\n\n\n\n<p class=\"\">\u201cEBITDA provides the world of finance with a better way of comparing one company\u2019s profitability to another.<\/p>\n\n\n\n<p class=\"\">\u201cIt\u2019s the key figure used by investors to assess the value of a business, and therefore one that should be monitored carefully by all business owners.\u201d<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Revenue growth rate<\/h3>\n\n\n\n<p class=\"\">Your revenue growth rate measures the rate at which your revenue increases over time.<\/p>\n\n\n\n<p class=\"\">A high revenue growth rate may indicate that you are successfully expanding your market share and should consider investing in further growth opportunities.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Customer acquisition cost<\/h3>\n\n\n\n<p class=\"\">Customer acquisition cost (CAC) is a metric you use to determine the cost of acquiring a new customer.<\/p>\n\n\n\n<p class=\"\">You calculate the CAC by dividing the total amount spent on sales and marketing activities by the number of customers acquired during a specific period.<\/p>\n\n\n\n<p class=\"\">Your CAC is important because it helps you understand the effectiveness of your sales and marketing and the overall profitability of your customer base.<\/p>\n\n\n\n<p class=\"\">You can determine your sales and marketing activities\u2019 return on investment (ROI) by comparing the CAC to the average revenue generated per customer.<\/p>\n\n\n\n<p class=\"\">A high CAC may indicate that you must re-evaluate your sales and marketing strategies.<\/p>\n\n\n\n<p class=\"\">At the same time, a low CAC may suggest you\u2019re not investing enough in customer acquisition.<\/p>\n\n\n\n<p class=\"\">Ryan Lei is the founder of <a href=\"https:\/\/padpcb.com\/\" rel=\"noopener noreferrer\">PCB manufacturer PadPCB<\/a> and a former professional trader. While working on a long-term strategy for PadPCB, he realized the significance of tracking metrics to make informed decisions about his company\u2019s growth and investments.<\/p>\n\n\n\n<p class=\"\">He says: \u201cBy keeping an eye on our CAC, we optimized our marketing efforts and improved the overall efficiency of our customer acquisition strategies.\u201d<\/p>\n\n\n\n<p class=\"\">Efficient sales and marketing processes driven by a strong focus on CAC can increase your profitability and drive sustainable long-term growth.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Customer lifetime value (CLV)<\/h3>\n\n\n\n<p class=\"\">Customer lifetime value (CLV) is a critical metric to determine the total value a customer will bring to your business over their entire relationship.<\/p>\n\n\n\n<p class=\"\">Simply put, CLV measures the revenue a customer generates for your business over time, considering factors such as repeat purchases, referrals, and customer loyalty.<\/p>\n\n\n\n<p class=\"\">By understanding CLV, you can better allocate your resources toward retaining valuable customers and acquiring new ones.<\/p>\n\n\n\n<p class=\"\">The CLV metric is especially important if you have a software as a service (SaaS) subscription-based model, as it helps identify your most profitable customers\u2014so you can optimize marketing and sales strategies accordingly.<\/p>\n\n\n\n<p class=\"\">A strong focus on CLV can lead to increased customer satisfaction, higher retention rates, and sustainable long-term growth.<\/p>\n\n\n\n<p class=\"\">Jack Prenter, CEO of Canadian financial website <a href=\"https:\/\/www.dollarwise.ca\/\" rel=\"noopener noreferrer\">DollarWise<\/a>, says often people view CLV as a revenue metric, but it\u2019s far better calculated as a gross profit metric.<\/p>\n\n\n\n<p class=\"\">He says: \u201cThe CLV allows you to gauge how much profit you can expect to earn after acquiring a new customer over their lifetime.<\/p>\n\n\n\n<p class=\"\">\u201cCLV is a fantastic metric for tracking the entire health of your business because it will include information like the strength of competition, your customer service and the quality of your offering.\u201d<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"cash\">Cash flow metrics<\/h2>\n\n\n\n<p class=\"\">Tracking cash flow metrics is crucial for any business to ensure its liquidity and ability to meet short-term obligations.<\/p>\n\n\n\n<p class=\"\">Melissa Houston says: \u201cCash flow shortages are high risk to a business, and when falling short, it can cause severe financial damage. <\/p>\n\n\n\n<p class=\"\">\u201cProactively managing cash levels is imperative to your success.\u201d<\/p>\n\n\n\n<p class=\"\">Here are some cash flow metrics to keep track of.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Operating cash flow<\/h3>\n\n\n\n<p class=\"\">This measures your cash, indicating whether your business generates enough to sustain your operations.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>A negative operating cash flow may indicate you need to increase sales or reduce costs to improve cash generation.<\/li>\n\n\n\n<li>A positive cash flow means you have more incoming cash than outgoing cash, resulting in a surplus of funds. You can use the surplus to invest in business growth, pay down debt, or increase cash reserves.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Free cash flow<\/h3>\n\n\n\n<p class=\"\">This measures the amount of cash remaining after a company has paid for capital expenditures, indicating whether the company has enough cash to invest in growth opportunities.<\/p>\n\n\n\n<p class=\"\">Ravi Kaushik is the CFO of <a href=\"https:\/\/agro.club\/\" rel=\"noopener noreferrer\">Agro.Club<\/a>, a US-based AgriTech company. He says, \u201cEvery CFO worth their salt should know the company\u2019s current cash position. <\/p>\n\n\n\n<p class=\"\">\u201cThey should also have a keen sense of the cash burn and how that impacts key decision-making.\u201d<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Cash conversion cycle<\/h3>\n\n\n\n<p class=\"\">Cash conversion cycle (CCC) measures the time it takes to convert inventory into cash, indicating how efficiently you manage your working capital.<\/p>\n\n\n\n<p class=\"\">A long cash conversion cycle may indicate that you must improve inventory management to generate cash quickly.<\/p>\n\n\n\n<p class=\"\">Jack Prenter says: \u201cFor businesses with inventory like retailers or manufacturers, CCC is the metric that dictates whether you live or die.<\/p>\n\n\n\n<p class=\"\">\u201cEven for non-inventory businesses like service providers and SaaS companies, monitoring your CCC is critical to understanding how long it takes to get your money back from any investments.\u201d<\/p>\n\n\n\n<p class=\"\">Ravi Kaushik says, \u201cFor B2B companies, the CCC is key, as typically if you are supplying to large corporates, they would pay you on terms, and you could have a working capital gap to finance.<\/p>\n\n\n\n<p class=\"\">\u201cHence, the shorter the cycle, the better financial health your company would be in.\u201d<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Productivity<\/h3>\n\n\n\n<p class=\"\">Oana Marele is the founder and managing director of <a href=\"https:\/\/mareleaccountancy.co.uk\/\" rel=\"noopener noreferrer\">Marele Accountancy<\/a>. She wants you to remember that profit and positive cash flow directly relate to productivity\u2014the output you can produce in a given time.<\/p>\n\n\n\n<p class=\"\">With productivity, you track how much output you generate in a given time or with a given amount of resources.<\/p>\n\n\n\n<p class=\"\">By increasing productivity, you can produce more output with the same amount of resources or produce the same output with fewer resources, leading to increased profits and positive cash flow.<\/p>\n\n\n\n<p class=\"\">Oana says: \u201cYou can measure productivity for individuals, teams or products, and express this in units or monetary value.<\/p>\n\n\n\n<p class=\"\">\u201cBy comparing the revenue generated by the output to the cost of resources used to produce it, you can determine the productivity level.<\/p>\n\n\n\n<p class=\"\">\u201cA productivity level of 0.5 is the minimum for survival, and higher levels lead to greater profitability and sustainability.\u201d<\/p>\n\n\n\n<p class=\"\"><div class=\"single-cta\">\n\t<a\n\t\tclass=\"button button--primary gate-5e10d568-37d6-4477-a96d-5d7493577a01\"\n\t\trole=\"button\"\n\t\tdata-button-location=\"content_area\"\n\t\thref=\"#gate-5e10d568-37d6-4477-a96d-5d7493577a01\"\n\t>Download your free copy of Managing modern finance in a time of unprecedented change<\/a>\n<\/div>\n<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"efficiency\">Efficiency metrics<\/h2>\n\n\n\n<p class=\"\">Tracking efficiency metrics is vital if you\u2019re looking to improve your operational performance and efficiency.<\/p>\n\n\n\n<p class=\"\">Note that productivity differs from efficiency:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Efficiency focuses on minimizing waste and maximizing output with minimal resources.<\/li>\n\n\n\n<li>Productivity measures how much output you produce per input unit.<\/li>\n<\/ul>\n\n\n\n<p class=\"\">Melissa Houston says: \u201cTo be a cost-effective business, you must be efficient. <\/p>\n\n\n\n<p class=\"\">\u201cInefficiencies cost money and reduce your profit; tracking efficiencies and striving for continual improvement will increase your bottom line.\u201d<\/p>\n\n\n\n<p class=\"\">Keep an eye on efficiency metrics such as the following.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Inventory turnover<\/h3>\n\n\n\n<p class=\"\">Inventory turnover measures how efficiently you manage your inventory and how quickly you sell your products.<\/p>\n\n\n\n<p class=\"\">A low inventory turnover may indicate you\u2019re holding too much inventory, leading to excess costs and potentially outdated products.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Days sales outstanding<\/h3>\n\n\n\n<p class=\"\">Days sales outstanding (DSO) measures how long it takes to collect payment from your customers, indicating how efficiently you manage your accounts receivable.<\/p>\n\n\n\n<p class=\"\">A high DSO may show that you need to improve your collections process to generate cash quickly.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Asset turnover<\/h3>\n\n\n\n<p class=\"\">Asset turnover measures how efficiently you use your assets to generate revenue.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"debt\">Debt and solvency metrics<\/h2>\n\n\n\n<p class=\"\">Tracking debt and solvency metrics is crucial to maintain financial stability and meet your long-term obligations.<\/p>\n\n\n\n<p class=\"\">Melissa Houston says: \u201cTaking on too much debt for a business is a red flag to investors. You want to lower your debt ratios to ensure your business will be around long term.\u201d<\/p>\n\n\n\n<p class=\"\">Here are some debt and solvency metrics to focus on.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Debt-to-equity ratio<\/h3>\n\n\n\n<p class=\"\">The debt-to-equity ratio measures how much debt you use to finance your operations relative to your equity, indicating how much risk you take.<\/p>\n\n\n\n<p class=\"\">A high debt-to-equity ratio may indicate that you have too much debt and need to reduce your leverage.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Interest coverage ratio<\/h3>\n\n\n\n<p class=\"\">The interest coverage ratio measures your ability to pay interest on your debt, indicating whether you have enough earnings to cover your debt payments.<\/p>\n\n\n\n<p class=\"\">A low-interest coverage ratio may indicate you need to increase earnings to cover your debt payments.<\/p>\n\n\n\n<p class=\"\">Ravi Kaushik says, \u201cThis is one of the most important ratios, as it gives a clear picture of your ability to pay your interest payments from the cash you have.\u201d<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Current ratio<\/h3>\n\n\n\n<p class=\"\">This measures your ability to meet your short-term obligations, indicating whether you have enough current assets to cover your current liabilities.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Reviewing your debt and solvency metrics<\/h3>\n\n\n\n<p class=\"\">You should monitor debt and solvency metrics to ensure your company can survive financial shocks.<\/p>\n\n\n\n<p class=\"\">During a financial crisis, businesses with high debt and poor solvency often struggle, while those with strong metrics may be better equipped to weather the situation.<\/p>\n\n\n\n<p class=\"\">Regularly assess your company\u2019s ability to manage unexpected events by tracking economic indicators.<\/p>\n\n\n\n<p class=\"\">Riva Jeane May Caburog, PR\/media coordinator at <a href=\"https:\/\/personalinjurylawcal.com\/\" rel=\"noopener noreferrer\">Nadrich &amp; Cohen Accident Injury Lawyers<\/a>, says: \u201cIt\u2019s not a secret that Apple managed to grow its market share and continue investing amidst the 2008 financial crisis.<\/p>\n\n\n\n<p class=\"\">\u201cThe reason is that it has low debt-to-equity and high current ratios.<\/p>\n\n\n\n<p class=\"\">\u201cExecuting similar measures can help CFOs from other companies navigate economic downturns and maintain their financial stability.\u201d<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Market metrics<\/h2>\n\n\n\n<p class=\"\">Tracking market metrics is essential to understand your financial performance relative to competitors and the overall market perception of your value.<\/p>\n\n\n\n<p class=\"\">Here are some metrics that can help you identify potential issues with your market performance.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Price-to-earnings ratio<\/h3>\n\n\n\n<p class=\"\">The price-to-earnings (P\/E) ratio measures your stock price relative to your earnings per share, indicating whether the market perceives your company as undervalued or overvalued.<\/p>\n\n\n\n<p class=\"\">A low price-to-earnings ratio may indicate that you need to improve your earnings growth to increase your stock price.<\/p>\n\n\n\n<p class=\"\">Ryan Lei says: \u201cThis metric helped me assess the valuation of our business relative to its earnings, allowing us to compare our performance with industry peers and make informed decisions about our growth strategy.\u201d<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Earnings per share<\/h3>\n\n\n\n<p class=\"\">Earnings per share (EPS) is a financial metric to measure your profitability and the value you provide to your shareholders (once you have them).<\/p>\n\n\n\n<p class=\"\">It represents the net income earned per outstanding share of your common stock.<\/p>\n\n\n\n<p class=\"\">In other words, EPS shows how much profit the company has generated for each share of stock held by its investors.<\/p>\n\n\n\n<p class=\"\">Investors widely use EPS to evaluate a company\u2019s financial health and potential for growth.<\/p>\n\n\n\n<p class=\"\">If you have a high EPS, your business may be more profitable and attractive to investors than if you have a lower EPS.<\/p>\n\n\n\n<p class=\"\">However, it\u2019s important to note that EPS can be affected by several factors, such as stock buybacks, share issuances, and changes in accounting methods.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Market capitalization<\/h3>\n\n\n\n<p class=\"\">Market capitalization measures your total market value, indicating your size relative to others.<\/p>\n\n\n\n<p class=\"\">You calculate it by multiplying the current market price of a company\u2019s stock by the total number of shares outstanding.<\/p>\n\n\n\n<p class=\"\">Market capitalization represents the market\u2019s perception of your value.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Market share<\/h3>\n\n\n\n<p class=\"\">Your market share represents your company\u2019s competitive position within your market.<\/p>\n\n\n\n<p class=\"\">Your market share is the percentage of total sales in a market held by a particular company or product. Calculate it by dividing your sales revenue by the total sales revenue of all companies in your market.<\/p>\n\n\n\n<p class=\"\">Ryan Lei says: \u201cMonitoring our market share allowed us to evaluate our competitive position in the industry and identify areas where we could expand or improve.\u201d<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Shareholder return<\/h3>\n\n\n\n<p class=\"\">Shareholder return measures the return on investment for shareholders, including dividends and stock price appreciation.<\/p>\n\n\n\n<p class=\"\">A low shareholder return may indicate that you must increase dividends or share buybacks to increase shareholder value.<\/p>\n\n\n\n<p class=\"\"><div class=\"single-cta\">\n\t<a\n\t\tclass=\"button button--primary gate-5e10d568-37d6-4477-a96d-5d7493577a01\"\n\t\trole=\"button\"\n\t\tdata-button-location=\"content_area\"\n\t\thref=\"#gate-5e10d568-37d6-4477-a96d-5d7493577a01\"\n\t>Download your free copy of Managing modern finance in a time of unprecedented change<\/a>\n<\/div>\n<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"thin\">Think about the metrics relevant to your industry<\/h2>\n\n\n\n<p class=\"\">This isn\u2019t an exhaustive list\u2014certain metrics relevant to your industry will be missing here.<\/p>\n\n\n\n<p class=\"\">Hannah Munro, managing director of financial transformation consultancy <a href=\"https:\/\/itassolutions.co.uk\/sage-resources\/cfo-40-podcast\/\" rel=\"noopener noreferrer\">Itas and host of the CFO 4.0 Podcast<\/a>, says, \u201cEach industry tends to have its own set of measures and benchmarks.<\/p>\n\n\n\n<p class=\"\">\u201cFor instance, a SaaS business will focus on subscription-based metrics such as ARR [annual recurring revenue], MRR [monthly recurring revenue], new customers, and both revenue and customer churn.<\/p>\n\n\n\n<p class=\"\">\u201cA stock-focused business will look at things like delivered In full, on time [DIFOT] or on time in full [OTIF], which measures how well you are delivering to customers.<\/p>\n\n\n\n<p class=\"\">\u201cA project or consultancy-based business will look at utilization percentage, number of chargeable days\/hours, etc.\u201d<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"unlcoking\">Unlocking insights: Benchmarking in metric analysis<\/h2>\n\n\n\n<p class=\"\">Remember that tracking key financial metrics is only part of effective financial reporting.<\/p>\n\n\n\n<p class=\"\">While doing that is important, how you analyze and interpret the data is also crucial to make informed decisions. It\u2019s essential to understand how the metrics relate and how changes in one metric can affect others.<\/p>\n\n\n\n<p class=\"\">Hannah says: \u201cIt\u2019s important that you not only track your performance but benchmark yourself against others in your industry.<\/p>\n\n\n\n<p class=\"\">\u201cAlways try to ensure you think through the metrics that matter to your organization and focus on those. Don\u2019t overdo it with too many as it\u2019s easy for people to get number or KPI blind.\u201d<\/p>\n\n\n\n<p class=\"\">With benchmarking tools, you can better understand your financial position, compare it to industry norms, and make informed decisions to drive business success. <\/p>\n\n\n\n<p class=\"\">Benchmarking can also help you stay competitive by identifying best practices and areas for improvement.<\/p>\n\n\n\n<p class=\"\">Sam Tabak, a board member at <a href=\"https:\/\/rmbhcharities.com\/\" rel=\"noopener noreferrer\">Rabbi Meir Baal Haness Charities<\/a>, says: \u201cWhen you monitor factors like inventory turnover, gross margin, and customer acquisition cost, you can understand how your organization performs relative to your competitors.<\/p>\n\n\n\n<p class=\"\">\u201cThis empowers you to devise strategies to improve financial performance and steer your organization to success. It also helps reduce excess inventory, cut costs, and increase profitability in your company.\u201d<\/p>\n\n\n\n<p class=\"\">Various benchmarking tools are available, including:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Industry benchmarks that can compare your financial performance to industry peers<\/li>\n\n\n\n<li>Publicly available financial statements to provide insights into your competitors\u2019 financial performance.<\/li>\n\n\n\n<li>Third-party benchmarking services that offer more detailed analysis and insights.<\/li>\n<\/ul>\n\n\n\n<p class=\"\">However, it\u2019s important to note that benchmarking against competitors may have limitations, such as differences in accounting policies, business models, and company strategies, which may affect the comparability of financial metrics.<\/p>\n\n\n\n<p class=\"\">In addition, you must ensure that stakeholders understand the reports you\u2019re sharing with them.<\/p>\n\n\n\n<p class=\"\">Hannah says: \u201cMake sure you sit down with your stakeholders (1-2-1 if possible) and explain the metrics\u2014how you calculate them and why they are important.<\/p>\n\n\n\n<p class=\"\">\u201cPart of being a good finance partner to a business is increasing the financial and reporting literacy of your stakeholders and colleagues.<\/p>\n\n\n\n<p class=\"\">\u201cDon\u2019t assume they know what you are talking about. Often, they will not want to look ignorant by asking.\u201d<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"how\">How can technology help with benchmarking?<\/h2>\n\n\n\n<p class=\"\">Technological advancements in business intelligence, <a href=\"https:\/\/www.sage.com\/en-gb\/blog\/ai-finance-chatgpt-generative-ai-cfos\/\">artificial intelligence<\/a> (AI) and machine learning are changing the benchmarking and financial analysis landscape.<\/p>\n\n\n\n<p class=\"\">As a former tech venture capitalist turned operator\/CFO, Ravi Kaushik says: \u201cThe modern CFO will not only be defined by their financial acumen and a keen understanding of their business, but also by their ability to build a state-of-the-art tech stack for the finance function.\u201d<\/p>\n\n\n\n<p class=\"\">These tools can help you use data to gain a competitive advantage in your industry.<\/p>\n\n\n\n<p class=\"\">For example, AI-powered algorithms can analyze financial data to identify patterns and trends, while machine learning can help you make more accurate predictions about future financial performance.<\/p>\n\n\n\n<p class=\"\">Here are some examples:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Business intelligence (BI) tools<\/h3>\n\n\n\n<p class=\"\">BI tools can help CFOs collect and analyze large amounts of data from different sources, including competitors\u2019 financial statements, industry reports, and internal financial data.<\/p>\n\n\n\n<p class=\"\">These tools can provide real-time insights into your financial performance and help identify areas where you\u2019re outperforming or underperforming compared to your competitors.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Artificial intelligence (AI) and machine learning<\/h3>\n\n\n\n<p class=\"\">You can use AI and machine learning algorithms to analyze large amounts of financial data to identify patterns and trends that may not be apparent through manual analysis.<\/p>\n\n\n\n<p class=\"\">These technologies can help you identify growth opportunities, optimize pricing strategies, and forecast future financial performance.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Robotic process automation (RPA)<\/h3>\n\n\n\n<p class=\"\">You can use RPA to automate repetitive and time-consuming tasks, such as data collection and entry, allowing your finance team to focus on more strategic tasks, such as analysis and decision-making.<\/p>\n\n\n\n<p class=\"\">You can potentially use RPA to gather and process competitor financial data more efficiently and accurately.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Cloud computing<\/h3>\n\n\n\n<p class=\"\"><a href=\"https:\/\/www.sage.com\/en-ca\/sage-business-cloud\/intacct\/\">Cloud-based financial software<\/a> can provide you with access to real-time financial data and tools for data visualization and analysis. <\/p>\n\n\n\n<p class=\"\">This may help you benchmark your financial performance against competitors more quickly and easily.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"final\">Final thoughts on CFO metrics<\/h2>\n\n\n\n<p class=\"\">Don\u2019t rely solely on financial metrics to measure success.<\/p>\n\n\n\n<p class=\"\">Other important factors, such as customer satisfaction, employee engagement and social responsibility, should also be considered when evaluating your performance.<\/p>\n\n\n\n<p class=\"\">Yet it\u2019s still fair to say that tracking key financial metrics and benchmarking against industry standards and competitors is crucial for effective financial reporting and strategic decision-making.<\/p>\n\n\n\n<p class=\"\">By regularly reviewing and analyzing metrics such as revenue growth, profit margins and ROI, you can better understand your company\u2019s financial performance and identify areas for improvement.<\/p>\n\n\n\n<p class=\"\">Today\u2019s benchmarking tools could provide valuable insights and help inform strategic decision-making.<\/p>\n\n\n\n<p class=\"\">But as technology evolves, you may also want to look at emerging tools such as business intelligence, AI and machine learning to gain a competitive advantage and drive business success.<\/p>\n\n\n\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Subscribe to the Sage Advice Newsletter<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p class=\"cta-content__title\">Get a roundup of our best business advice in your inbox every month.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-8949a954-88b2-43bb-8b8a-77c53eb34350\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Subscribe<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2022\/04\/GettyImages-1073797282-1440x810.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2022\/04\/GettyImages-1073797282-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Financial reporting is critical to any business. Discover the key metrics that CFOs and finance teams should keep track of.<\/p>\n","protected":false},"author":356,"featured_media":8913,"menu_order":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sage_video":false,"post_featured_image_hide":false,"footnotes":""},"categories":[7],"tags":[266,271,274,265,263],"business_type":[99],"lilypad":[],"context":[],"industry":[],"persona":[],"imagine_tag":[54],"coauthors":[312],"class_list":["post-9818","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-money-matters","tag-business-finances","tag-cash-flow","tag-cfo","tag-how-to-grow-your-business","tag-midsized-business","business_type-medium-business"],"sage_meta":{"region":"en-ca","author_name":"Asavin Wattanajantra","featured_image":"https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2022\/12\/GettyImages-960890176.jpg","imagine_tags":{"54":"Medium Businesses"}},"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"Sage Advice Canada English","distributor_original_site_url":"https:\/\/www.sage.com\/en-ca\/blog","push-errors":false,"_links":{"self":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/posts\/9818","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/users\/356"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/comments?post=9818"}],"version-history":[{"count":0,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/posts\/9818\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/media\/8913"}],"wp:attachment":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/media?parent=9818"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/categories?post=9818"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/tags?post=9818"},{"taxonomy":"business_type","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/business_type?post=9818"},{"taxonomy":"lilypad","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/lilypad?post=9818"},{"taxonomy":"context","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/context?post=9818"},{"taxonomy":"industry","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/industry?post=9818"},{"taxonomy":"persona","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/persona?post=9818"},{"taxonomy":"imagine_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/imagine_tag?post=9818"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/coauthors?post=9818"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}