24 financial KPIs every small business should track

To understand your business’s financial health, you need numbers that give you a clear picture while guiding your next moves. But how do you choose which key performance indicators (KPIs) matter to your business?

In this article, we’ll break down how to determine, calculate, and monitor the KPIs that give you a clear picture of the profitability, liquidity, and efficiency of your business.

What is a financial KPI?

Financial key performance indicators (KPIs) are metrics that show how your business is performing. Financial KPI metrics can help you track profitability, visualize and manage cash flow, and understand how efficiently your business runs. Unlike general business metrics, financial KPIs focus on monetary outcomes—how money moves through your business and what that says about your financial health.

For small businesses, the right business financial KPIs can be a game-changer, highlighting problems before they escalate or uncovering areas for growth. Yet many small business owners don’t measure KPIs because they need to focus on day-to-day operations. By automating KPI tracking, small businesses can benefit from measuring KPIs without becoming overwhelmed.

Categories of financial KPIs

Financial KPIs generally fall into a few core categories, each revealing a different side of your business’s performance:

• Profitability KPIs: These metrics show how effectively your business turns revenue into profit. They can uncover whether your pricing strategy works, your costs are under control, and your operations are generating sustainable profit.

• Liquidity KPIs: Liquidity measures your ability to cover short-term expenses or emergencies without relying on new debt. Your liquidity KPI will tell you how much financial breathing room you have. 

• Efficiency KPIs: Efficiency indicators reveal how smoothly your business runs. They reveal how quickly inventory becomes revenue, how effectively you collect payments, and how well your assets earn returns.
• Investor KPIs: For growing businesses with shareholders or investors, these metrics track how well you’re creating value. They help you determine if you’re delivering the returns your investors expect—or where performance may be lagging.

Did you know?

Cash flow management is a common issue for many small businesses. In fact, nearly 4 in 10 small business owners have less than one month’s worth of operating expenses available.

Read our full report

24 financial KPIs to track

Knowing which financial KPIs to monitor can reshape how you manage and grow your business. Below is a breakdown of 24 key metrics, including the formulas to calculate each one.

1. Revenue Growth Rate (RGR)

Your revenue growth rate shows how fast your business is expanding. Tracking your RGR monthly, quarterly, and annually allows you to visualize your business’s growth.

2. Gross Profit Margin (GPM)

Gross profit margin shows how efficiently you generate profit before expenses. Higher margins indicate efficient production and pricing strategies. But remember this is gross profit, so expenses and other costs aren’t yet accounted for.

3. Net Profit Margin (NPM)

Your net profit margin reveals your true profitability after all expenses, including production costs, operating expenses, interest, and taxes. A higher NPM means you’re keeping more of what you earn.

4. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)

EBITDA highlights operational profitability by excluding non-operational costs. This can be useful for comparing two companies’ financial health when they have different tax or debt structures.

5. Operating Cash Flow (OCF)

Operating cash flow shows whether your business can sustain itself for a longer period without external financing. It’s a good test of financial sustainability.

6. Free Cash Flow (FCF)

Free cash flow measures cash available after operating costs and investments. Strong FCF gives you flexibility to invest in new opportunities, pay debt, or handle slow periods.

7. Current Ratio (CR)

Your current ratio shows if you can cover short-term obligations with current assets. A ratio above 1.0 means you’re solvent, or can cover all your debts and liabilities. A good goal is a CR between 1.5 to 3.0. 

8. Quick Ratio (QR)

The quick ratio—also called the “acid test”—is similar to the current ratio, but it excludes inventory and is therefore a stricter metric. A ratio of 1.0 or higher indicates strong short-term financial health.

9. Debt-to-Equity Ratio (DTE)

Debt-to-equity ratio shows how much debt your business carries versus equity. This metric demonstrates shareholders and lenders how much leverage you have if you need to acquire new financing.

10. Working Capital

Working capital reflects how much cash you have for daily operations. Positive working capital means you can cover short-term expenses, while negative working capital suggests potential cash flow challenges.  

Bluevine Tip

A great way to access additional working capital is to apply for a business line of credit, which you can draw from as you need. With a revolving credit line, you only pay for what you use.

Explore line of credit

11. Accounts Receivable Turnover (ART)

Accounts receivable turnover measures how quickly you collect payments. Higher turnover means faster collections and less money tied up in unpaid invoices.

12. Accounts Payable Turnover (APT)

Accounts payable turnover shows how efficiently you pay your bills. Consistent payments strengthen vendor relationships and make it easier to get financing.

13. Inventory Turnover (IT)

Inventory turnover tracks how often you sell and replace inventory. Higher turnover suggests healthy demand, strong sales, and efficient inventory management. Low turnover could mean overstocking or weak demand.

14. Cash Conversion Cycle (CCC)

The cash conversion cycle measures how long it takes to convert inventory and receivables into cash. A shorter cycle means better cash flow. The variables in the formula are days inventory outstanding (DIO), days sales outstanding (DSO), and days payable outstanding (DPO).

15. Return on Assets (ROA)

ROA measures how efficiently you generate profit from assets. This metric shows whether you’re making good use of equipment, inventory, and other resources. It’s calculated by dividing net income (NI) by total assets (TA). A higher ROA indicates better asset utilization. Declining ROA suggests assets aren’t generating adequate returns.

16. Return on Equity (ROE)

ROE measures the return generated on shareholder investments. This metric matters most to business owners and potential investors. Divide net income (NI) by shareholder equity (SE) to calculate it. Both numbers are on the balance sheet. Strong ROE demonstrates that the business effectively uses ownership capital to generate profits.

17. Earnings Per Share (EPS)

EPS calculates profit per share of outstanding stock. This metric primarily matters for corporations with multiple shareholders. You can find this number by subtracting preferred dividends (PD) from net income (NI) and dividing the difference by your average outstanding shares (AOS).

18. Customer Acquisition Cost (CAC)

CAC measures how much you spend to acquire each new customer. This metric is essential for businesses with recurring revenue models or long customer lifecycles. This is another simple calculation. You divide total sales and marketing expenses (TE) by the number of customers acquired (CA).

19. Customer Lifetime Value (LTV)

LTV estimates the total revenue you’ll generate from a single customer over the entire business relationship. This metric pairs with CAC to assess marketing efficiency. You can calculate customer lifetime value by multiplying the average purchase value (APV) by the purchase frequency (PF) by the average customer lifespan (ACL). 

Read more about how to improve customer lifetime value.

20. Churn Rate (CR)

Churn rate measures the percentage of customers who stop doing business with you during a specific period. Lower churn indicates better customer retention. The math is simple. Divide the number of customers lost (CL) by your total customers at the start of the period (CSP). This is important because high churn can undermine growth.

21. Revenue Per Employee (RPE)

This metric measures revenue generated per employee, revealing workforce efficiency and operational leverage. The math calls for you to divide your total revenue (R) by the number of employees (E). Doing this for the entire company might not be granular enough for analytics, but you can also do it by department to measure productivity.

22. Return on Invested Capital (ROIC)

ROIC measures returns generated on all capital invested in the business, including both equity and debt. This comprehensive metric shows overall capital efficiency. Divide your total net operating profit after tax (NPAT) by total invested capital (TIC). Businesses with high ROIC attract investment and command premium valuations.

23. Gross Burn Rate (GBR)

Gross burn rate shows how quickly a business spends cash before accounting for revenue. This metric is critical for startups and growth-stage companies. If you’re a startup, subtract your total monthly operating expenses from your seed funds. The result will tell you how long it will take to “burn” those funds. That’s the point where you’ll need to start generating revenue.

24. Net Promoter Score (NPS)

While not purely financial, NPS predicts future revenue by measuring customer loyalty and satisfaction. Customers who would recommend your business drive growth through referrals.

Higher NPS correlates with stronger customer retention, lower acquisition costs, and sustainable growth. This metric provides early warning of customer satisfaction issues.

Bluevine Tip

Boost customer satisfaction and retention by personalizing aspects of your customer experience. Segmentation is a start, but there are even more personalized ways to engage your customers throughout their buying journey—including targeted emails and ads, smart product recommendations, and tailored customer support options. Plus, this is a great use case for incorporating AI into your everyday operations.

Get more tips for improving customer experience with personalization.

How to choose the right KPIs for your business

Tracking every possible metric creates noise without insight. The key is selecting KPIs that align with your specific business goals and current situation.

• Identify business goals. Start with your objectives. Are you focused on growth? Prioritize revenue growth rate, CAC, and LTV. Concerned about cash flow? Focus on operating cash flow, current ratio, and cash conversion cycle.
• Focus on KPIs relevant to your business stage and industry. A bootstrapped startup needs different metrics than an established manufacturer seeking acquisition. SaaS companies obsess over monthly recurring revenue and churn. Retailers focus on inventory turnover and gross margin. 
• Avoid tracking too many metrics. Most small businesses can’t effectively monitor more than 5–10 core KPIs. Additional metrics create dashboard clutter without improving decisions. Select the vital few that drive your business forward.
• Align KPIs with key decision-making points. Your chosen metrics should inform specific decisions. If a KPI doesn’t influence how you run your business, stop tracking it. Every metric should answer a question or trigger an action.
• Review and adjust KPIs periodically. Your business evolves, and your metrics should too. What matters during a growth phase differs from what matters during optimization or exit planning. For best results, reassess your KPI dashboard quarterly.

How to monitor and track KPIs

Selecting the right KPIs means nothing if you don’t have systems to track them consistently. Effective monitoring requires the right tools and processes.

• Use dashboards or financial management software. Modern accounting software and business intelligence tools make KPI tracking manageable. Platforms like QuickBooks and Xero—which sync seamlessly with Bluevine—automatically calculate key metrics from your financial data.
• Set up regular reporting intervals. Consistency matters more than frequency. Some metrics need daily monitoring, others work fine with monthly reviews. Establish a reporting schedule. Regular reviews help you spot trends before they become problems.
• Automate calculations. Manual KPI calculation is time-consuming and error-prone. Link your financial software to dashboard tools that update automatically. This automation ensures accuracy and frees your time for analysis instead of data entry.
• Customize dashboards for key KPIs. Create separate views for different purposes. Your daily operational dashboard might show cash flow and accounts receivable. Your monthly strategic review could focus on profitability and growth metrics. 
• Set alerts for unusual trends. Configure automatic notifications when KPIs move outside acceptable ranges. A sudden drop in gross profit margin or spike in customer acquisition cost deserves immediate attention.

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Take control of your business finances

Financial KPIs transform how you run your business. Instead of relying on gut feelings or waiting for year-end financial statements, these metrics provide real-time insights into performance. The right indicators help you identify problems early, capitalize on opportunities, and make data-driven decisions that drive sustainable growth.

Start simple. Choose three to five core financial KPIs aligned with your immediate business goals. Set up automated tracking systems, establish reporting rhythms, and use the insights to guide decisions. As you become comfortable with these metrics, gradually expand your dashboard to include additional indicators that matter for your evolving needs.

Strong financial management requires more than just tracking numbers. You need the right banking infrastructure to support your operations. A business checking account designed for small businesses provides the foundation for effective cash flow management, making it easier to monitor financial metrics and execute strategic decisions.

Financial KPI FAQs

How often should I track KPIs?

Tracking frequency depends on the metric and your business needs. Monitor critical metrics like cash flow weekly or even daily. Review profitability and efficiency metrics monthly. Strategic indicators like ROE and customer lifetime value work well with quarterly reviews. The key is consistency—regular tracking matters more than constant tracking.

Which KPIs are most important for small businesses?

Most small businesses should prioritize operating cash flow, gross profit margin, net profit margin, accounts receivable turnover, and revenue growth rate. These five metrics provide a comprehensive view of profitability, liquidity, and growth. Add industry-specific metrics as needed—retailers add inventory turnover, service businesses focus on utilization rates.

How do I improve a low-performing KPI?

First, understand why the metric is underperforming. A declining gross profit margin might result from rising costs or inadequate pricing. Slow accounts receivable turnover could indicate weak collection processes or too lenient credit terms. Once you identify the root cause, develop specific action plans to address it. Track improvement weekly until the metric stabilizes.

How do you present KPIs to the board quarterly?

Focus on trends, not just numbers. Show how KPIs changed over time, compare to targets, and explain variances. Highlight three to five critical metrics that tie directly to strategic goals. Use visual dashboards with clear charts showing performance. Prepare explanations for both positive and negative trends, and present specific action plans for addressing concerns.

Which KPIs measure cash flow health?

Operating cash flow, free cash flow, current ratio, quick ratio, cash conversion cycle, and working capital all provide insight into cash flow health. Together, these metrics reveal whether you generate enough cash from operations, can meet short-term obligations, and efficiently manage the cash-to-cash cycle. Most businesses should monitor at least three of these indicators regularly.