Performance Indicator Glossary

A current liability on your balance sheet that represents the money your business owes to suppliers and vendors for goods and services.

Accrual accounting records revenues and expenses when earned or incurred regardless of when cash changes hands, providing a more accurate representation of financial performance and economic reality.

Amortization spreads large costs over time, making expenses manageable while revealing the true cost of loans and assets.

A financial statement that provides a snapshot of a company's assets, liabilities, and equity at a specific point in time, revealing its overall financial position.

Cash Flow Adequacy Ratio is a financial metric that evaluates a company's ability to generate enough cash to cover its operational activities and capital expenditures.

Churn rate measures the percentage of customers who discontinue using a company's products or services during a specific period.

Cost of Goods Sold (COGS) represents all direct expenses associated with producing the goods a company sells, including raw materials, direct labor, and manufacturing overhead.

A financial ratio that measures how much of a company's assets are financed through debt, providing insight into financial leverage and stability.

Dividends are payments companies make to shareholders from their profits, providing regular income and signaling financial health regardless of stock price movements.

A comprehensive financial metric that measures true business profitability by subtracting both explicit costs and implicit opportunity costs from total revenue.

Free Cash Flow (FCF) is the cash a company generates from its operations after deducting capital expenditures.

The general ledger serves as the complete and centralized record of a company's financial transactions, providing the foundation for financial reporting, analysis, and decision-making.

A financial metric that tracks the increase in gross profit over time, indicating operational efficiency and providing capital for business growth and reinvestment.

An income statement, also known as a profit and loss statement (P&L), is a financial document that summarizes a company's revenues, costs, and expenses.

Intangible assets are non-physical resources that provide long-term economic benefits to companies, forming the foundation of competitive advantage.

Liabilities represent the financial obligations and debts a company owes to external parties that must be settled through the transfer of economic benefits over time.

Net Income represents a company's total profit after subtracting all expenses from revenue, providing the clearest measure of overall business profitability.

Operating Cash Flow (OCF) measures the actual cash generated from your business's core operations, revealing whether your company can sustain itself without external financing.

Prepaid expenses represent costs paid in advance for future benefits, recorded as assets until consumed to ensure proper matching of expenses with the periods they benefit.

The Price-to-Book (P/B) ratio compares a company's market value to its book value, helping investors determine whether a stock is trading above or below the value of its net assets.

The Quick Ratio measures a company's ability to pay short-term obligations using only its most liquid assets—without relying on inventory sales.

Retained earnings represent the cumulative net income a company has saved after distributing dividends to shareholders since its inception.

Revenue Growth measures the percentage increase in a company's sales income over specific time periods.

Explore the fundamentals of total revenue, including its definition, calculation formula, and importance in business strategy.

Work-in-Progress (WIP) Days is a critical performance metric that measures the average time items spend in production before completion.

A financial metric that measures what percentage of your company's revenue is tied up in working capital, indicating operational efficiency and resource utilization.