Free cash flow represents the money available to a business to repay its creditors and pay interest and dividends to investors. It indicates the cash available to a business after paying short-term liabilities and investing in the necessary operational equipment. It is also known as the working capital ratio and is an indicator of a business’s ability to pay off short-term liabilities.

  • With ROIC, you’ll be able to identify hidden revenue streams, eliminate unprofitable investments, and drive business growth.
  • Cash flow per share — also called free cash flow to the firm (FCFF) — is the amount of free cash flow on each outstanding share of your company’s stock.
  • The higher the ratio, the more likely the business is to be able to repay its short-term loans.
  • Cash flow yield (also called free cash flow yield) is a financial ratio that compares your company’s free cash flow to its current share value.
  • Making use of the right cash flow KPIs and performance metrics for your unique business objectives makes the process of managing cash flow much smoother.

It tracks the cash flows of a business through revenue generation and payment of expenses, but tends to exclude interest and investment returns. A comparison of the amount owed to the business by customers (accounts receivable) versus the amount owed by the business to suppliers (accounts payable). In this article, we will look at cash flow dashboard examples, and suggest the 10 most important metrics you can include in your cash flow dashboard for successful tracking of your business KPIs. Advanced analytics tools and software can further enhance the analysis process. Tools like predictive analytics and machine learning algorithms can provide forward-looking insights, helping organizations anticipate cash flow issues before they arise.

cash flow kpis

cash flow KPIs and performance metrics

They might find Operating Cash Flow and liquidity ratios essential to ensure they have enough resources for their ongoing activities. They are specific financial metrics that guide decision-making by showing a full picture of your company’s cash flow performance against financial goals. Small businesses, startups, and large enterprises alike can benefit from a cash flow dashboard. For small businesses, it helps maintain financial stability, avoid cash shortages, and plan for growth effectively. This guide will walk you through key performance indicators — essential benchmarks that give you insights into performance and growth. From understanding the most significant KPIs to aligning them with your strategic goals, you’ll gain the knowledge needed to set your business on a path to measurable improvement and success.

IT Dashboard Examples For IT Department Managers

It is a measure of how often receivables are converted into cash in a given period of time. Cash flow KPI tracking allows you to regularly gauge your business’ financial health and minimise risk. But even with this monitoring, the unexpected can happen — like a pandemic or recession — and destabilise your business. Net debt to free cash flow is a measure of how many years of free cash flow you’d need to repay your current outstanding debt.

Operating Cash Flow is perhaps the most fundamental cash flow metric as it reflects the cash generated or used by a company’s core business activities. It excludes cash flows from financing and investing activities, focusing solely on the cash generated from operations. This KPI is important because it helps investors understand how efficiently a company is using its assets to generate cash. The cash conversion cycle is a measure of how long it takes a company to convert its investments in inventory and receivables into cash.

So will investors, to the extent that asset managers and retail investors make their investment decisions based on environmental factors, such as carbon emissions. The goals of your business will ultimately inform which financial KPIs you should track. For example, is a company is burning $10,000 every month and has $80,000 to spend, the cash runway would be estimated to be 8 months. If your runway is consistently under a year, we recommend monitoring it every month.

It’s vital for understanding how effectively a company manages its accounts receivable and cash flow. Making use of the right cash flow KPIs and performance metrics for your unique business objectives makes the process of managing cash flow much smoother. Effective tracking of the above KPIs provides insights that help you to better understand how cash moves into and out of your business. This is invaluable when carrying out cash flow forecasting, improving your chances of making the right business decisions to maximize growth without damaging resiliency.

1. Revenue Growth KPIs: The Lifeline for Your Small Business

Free cash flow is a measure of how much cash a company generates after accounting for capital expenditures. It is calculated by subtracting capital expenditures from operating cash flow. Free cash flow can be used to determine a company’s ability to invest in new projects or return cash to shareholders.

Operating Cash Flow (OCF)

  • Identify trends, examine expenses, and compare your forecasted budgets to actual performance.
  • Finance can collaborate with relevant stakeholders to map out tech needs ahead of time.
  • For instance, if a company has accounts of $5,000, total credit sales of $20,000, and the period is 30 days, the DSO would be 7.5 days.

FasterCapital will become the technical cofounder to help you build your MVP/prototype and provide full tech development services. But since cash takes time to move around, following the indirect method offers a more accurate period of where your OCF stands at that moment. It takes this company about 8 days to turn its original cash investment to inventory and then back into cash.

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KPIs help leaders identify priorities and focus their efforts on activities that have the most influence on growth, profitability, or other objectives. Cash flow monitoring involves regularly tracking your company’s cash inflows and outflows and comparing them to your earlier projections to identify any variances or anomalies. This can be done manually or by using an automated cash flow monitoring tool like a dashboard or software. By calculating FCFE, businesses can determine their capacity to fund dividends or reinvest in growth opportunities. This metric takes into account factors such as capital expenditures, net income, changes in working capital, and debt repayments.

Finance leaders use a CFO dashboard to access an overview of their company’s financial performance and health. It is an analytical tool that provides a centralized location to access real-time data and see KPIs. Having a dashboard gives CFOs the ability to track, analyze, and report on key financial figures. This helps a leadership team understand the company’s fiscal health, identify areas for risks or improvements, and develop a company strategy to reach their financial goals. A CFO key performance indicator (KPI) is used to measure financial performance, and by extension the performance of the CFO.

As a new business owner, there will be a variety of financial reports and terms that you may not be aware of. A MIS Report (Management Information System) is a set of reports that that provides information to management and other decision-makers in a business…. In August 2025, we have also begun to compile an extensive benchmarks database. These best practice documents below are available for individual purchase from Flevy , the largest knowledge base of cash flow kpis business frameworks, templates, and financial models available online. Tracking the right Key Performance Indicators (KPIs) is critical in getting your business on the right path. Knowing what to focus on first will enable you to evaluate and thus be responsible for more progress in this new position and your company.

A low ART either means that the company has difficulty collecting from its customers or is offering clients payment terms that are too lenient. Startups, particularly those in the growth stage, should prioritise metrics like Free Cash Flow and Operating Cash Flow. Many startups operate at a loss in the initial years, making the understanding of their cash burn rate critical for survival and growth. A company has a net income of $100 million, non-cash expenses of $10 million and a negative change in working capital of $50 million, giving an OCF of $60 million. Since our database is so vast, sometimes it may be difficult to find what you need.