How do you know your company is financially fit? We all talk it to death: profit, profit, profit. And for good reason—your profitability, and therefore your profit margin, is the single best measure of company health. However, it is a mistake to think that is all there is to it. There are other metrics you should be using to gauge company health.
How is your current operating efficiency, or your brand strength at the moment? What about your ability to pay debt over the long-term? Is your long-term return on invested capital (ROIC) accelerating or slowing, and how does it relate to your industry peers? Both short-term metrics and long-term metrics matter.
Your company’s financial fitness should include revenue growth, size growth and client growth. And, the metrics you use should be industry-specific based on thorough analytics. Don’t know where to start? That is where we come in with our awesome accounting team. But, in the meantime, you can begin your company health check by looking at the following measures.