5 Critical KPI's For Your Business

1: Net Profit Margin: Percentage of revenue that remains as profit after all expenses.
Formula: Net Profit (post-tax) / Sales Revenue
Why it matters: Reveals true profitability and operational efficiency. A net profit margin above 10% is often considered healthy in many industries, but in some highly competitive sectors the net profit margin might be lower, in the range of 2-5%, for instance.

2: Operating Expense Ratio: Percentage of revenue spent on operating costs.
Formula: Operating Expenses / Revenue * 100
Why it matters: Helps you control overhead and improve margins, especially if tracked and monitored over time, and before and after structural efficiency changes.

3: Accounts Receivable Turnover: How quickly you collect payments from customers.
Formula: Net Credit Sales / Average AR
Average AR = (Current AR + Prior AR) / 2
Why it matters: Impacts cash flow and working capital. Higher is better—aim for 10+ annually.
A low accounts receivable turnover ratio suggests that the business takes longer to collect payments, which could result in a higher risk of bad debt and lead to cash flow problems.

4: Cash Flow Forecast: Projection of incoming and outgoing cash over time.
Why it matters: Ensures you can cover expenses and invest in growth.
Tip: Monitor through QuickBooks reporting monthly to avoid surprises.

5: Customer Acquisition Cost (CAC): Total cost to acquire a new customer.
Formula: (Marketing + Sales Costs) / # New Customers Acquired
Why it matters: Tracking this helps you evaluate marketing ROI and pricing strategy. It is especially helpful to track and evaluate multiple lead generating sources and strategies with this metric to boost efficiency and redirect marketing funds to their most efficient channels.

Want more insight into your business?

These KPIs are just the beginning. Every business has unique metrics that can be tracked, optimized, and aligned with growth. Without clear data, you're driving in the dark. Let Warp 6 Support help illuminate your path—so you can accelerate with clarity and confidence.