Today’s chief financial officers continue to bear the responsibility of tracking cash flow, financial planning, and reporting on the company’s financial performance, but they’re also increasingly a central force in the operational and strategic planning that help a company meet their financial goals. This means CFOs must deliver a clear point of view on which metrics—known as key performance indicators (KPIs)—best capture the company’s performance. CFOs then need a strategy for tracking and sharing more broadly those metrics to pinpoint opportunities for improvement and rally the company to act on them. To achieve all this, CFOs must map out what specific metrics need to be tracked and build a dashboard to gather and display these metrics.
What Is a CFO KPI?
A CFO key performance indicator (KPI) is used to measure financial performance, and by extension the performance of the CFO. CFO KPIs are metrics that help a finance team track how a company is doing and make well-informed decisions to maintain success or get the company back on track. CFO KPIs help companies understand their financial performance by offering insight into their efficiency, profitability, and risk management. Emerging KPIs related to sustainability could rise in importance, depending on what regulators require and how much investors weigh environmental factors in their decisions. Sharing these KPIs more broadly beyond finance can help the company spot problems or successes early and help keep business unit leaders focused on the right outcomes.
What Is a CFO Dashboard?
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.
Key Takeaways
- A CFO KPI is a measurement of a company’s financial performance. It is a metric that helps CFOs make informed financial decisions that help the organization to meet its goals.
- Companies can better understand their financial performance by monitoring and analyzing CFO KPIs. These metrics provide insight into a company’s efficiency, profitability, and opportunities for growth, along with the accompanying risks.
- Your organization’s financial goals, size, industry, business model, and operating processes will inform which CFO KPIs you should track.
- Using a CFO dashboard can give you an overview of your organization’s financial performance. A dashboard will give you to ability to track, analyze, and report important financial figures.
What KPIs Should Be in a CFO Dashboard?
The KPIs to include in your CFO dashboard will depend on your company’s goals and requirements, but they should help leadership know how the company is performing; what potential risks they face in areas such as cash flow and liquidity; and help when making crucial financial decisions, such as expansions, acquisitions, layoffs, or divestitures. Sustainability KPIs can measure the environmental impact of business operations.
To help CFOs address these tasks, here are some commonly used financial KPIs, plus a couple of emerging sustainability measures:
Revenue and profit:
- Revenue growth rate
- Gross profit margin
- EBITDA margin
- Compound annual growth rate (CAGR)
- Revenue variance analysis
- Return on assets (ROA)
Operational:
- Operating cash flow
- Cash conversion cycle (CCC)
- Working capital
- Accounts payable turnover
- Accounts receivable turnover
Financial efficiency:
- Return on equity (ROE)
- Cash runway
- Days sales outstanding
- Days payable outstanding
Liability:
- Working capital
- Quick ratio
- Debt-to-equity ratio
Sustainability:
- Weighted average carbon intensity, by revenue
- Physical carbon intensity ratios (industry specific)
CFO KPI Dashboard Example
A CFO KPI dashboard will have a combination of visuals and metrics to help you make educated and swift financial assessments. Having KPIs in a dashboard makes it easier to regularly assess metrics that matter to the business to keep leaders focused and help them spot problems or success early. Having relevant metrics at hand also help your business create strategies with clear financial goals. To be relevant, however, a CFO KPI dashboard must be fed with timely, accurate data.
How to Decide Which Financial KPIs to Track
The goals of your business will ultimately inform which financial KPIs you should track.
In addition to being quantifiable and actionable, the most effective KPIs will align with your company’s goals. For instance, is profit and cash flow most important in the coming year, or is revenue and market share growth more important, even at the expense of profit? Those strategic decisions will shape which KPIs get top billing and attention in a dashboard. So if the goal is to improve the company's cash position over the next year, then a measurable goal could be “increase cash flow by 15% in 12 months,” and critical KPIs could include specific targets for operating cash flow, cash conversion cycle, and EBITDA margins.
When thinking about the KPIs that should be included in your CFO dashboard, think about your organization’s financial goals, size, maturity, industry, business model, fiscal policy, operating processes, and other components. A comprehensive CFO dashboard will let you quickly analyze your company’s financial health.
In terms of sustainability metrics, there’s no hard-and-fast consensus yet on which KPIs are most useful and influential. Regulators will have a big influence on this as they create reporting requirements. So will investors, to the extent that asset managers and retail investors make their investment decisions based on environmental factors, such as carbon emissions.
Dashboards typically include graphs and reports that help pinpoint financial risks and opportunities for improvement. In addition to companywide metrics, applying these KPIs at the business unit level can offer insight into which products or services are most popular with customers, which areas are most expensive to run, and any areas that are a drag on the company’s performance.
20 Top CFO Dashboard KPIs and Metrics
KPIs are used to quantify financial performance. To help your organization achieve its financial goals, you must have a strong understanding of your current performance by analyzing the right KPIs.
Here we will explore the most commonly used KPIs, so you can determine which ones your organization should be tracking:
Revenue and profit:
These KPIs show how a company’s revenue is trending and how much profit it generates from that revenue.
- 1. Revenue growth: It’s the simplest measure and the starting point for any discussion—are we a growing or shrinking company? Revenue growth = (current revenue – prior period revenue) / prior period revenue x 100
- 2. EBITDA margin: Earnings before interest, taxes, depreciation, and amortization measures the company’s core profitability. EBITDA is similar to net income but it attempts to strip out financing and accounting decisions to make companies’ profitability more comparable head-to-head. EBITDA = net income + interest + taxes + depreciation + amortization
- 3. Gross profit margin: This profitability measure assesses the basic profitability of your offering—what you can sell your products for compared with what it costs to make them. It doesn’t include marketing, sales, and general administrative costs, which are captured in operating margin. Gross profit margin = (revenue – cost of goods sold) / revenue
- 4. Net profit margin: This tells how much net income comes from every dollar of profit. Net income is the final profit number on income statements, factoring in all costs, including cash costs and noncash expenses, such as depreciation. Net profit margin = (net income / revenue) x 100
- 5. Compound annual growth rate (CAGR): This measures how much compound growth the company has achieved over a certain period of time. This helps provide a longer view than year-over-year revenue growth. CAGR = ((ending balance) / (beginning balance))^(1 / number of years where growth occurred) – 1
- 6. Budget variance: This compares forecasted budget to actual results, and can be done for any number of financial elements, such as revenue, expenses, margin, and net income. Revenue budget variance = (actual revenue-budgeted revenue)/ budgeted revenue
- 7. Return on assets: This shows how much profit a company is generating from the assets it owns. ROA = net income / average total assets
Operational
These KPIs show how well the company is running, with particular emphasis on how well the company turns operating activities into cash.
- 8. Operating cash flow: This measures how much cash flow is generated from everyday operations. The large amount of data associated with this metric can be tracked using CFO dashboard software. Operating cash flow = operating income + depreciation – taxes + change in working capital
- 9. Cash conversion cycle: This measures how many days are needed to convert goods into cash. Cash conversion cycle = days of inventory outstanding + days sales outstanding – days payables outstanding
- 10. Accounts payable turnover: This measures the amount of time it takes a company to pay its suppliers. A decreasing ratio could indicate cash flow issues. An increasing ratio could suggest insufficient cash allocation, and that money could be better used. Accounts payable turnover ratio = total supplier credit purchases / average accounts payable
- 11. Accounts receivable turnover: This measures how quickly customers pay for the goods or services you provide. A low ratio suggests you could improve how well you collect credit from customers. Too high of a ratio, though, could suggest a growth opportunity by extending more credit to customers. Accounts receivables turnover = total credit sales ÷ average accounts receivables
Financial efficiency
These KPIs measure how effectively a company is using investors’ capital, including cash.
- 12. Return on equity: This measures how effectively investors’ and business owners’ money is being used to create profit. Return on equity = net income / shareholder equity value
- 13. Cash runway: This measures the amount of cash your company is spending each week in order to project how long you will be able to operate without additional cash investment. Cash runway = current cash balance / burn rate
- 14. Days payable outstanding (DPO): This illustrates in days the pace of accounts payable. A higher DPO can reflect that you’re taking the right amount of credit that suppliers offer, hanging onto cash to keep a strong working capital position. Too high, though, could suggest you don’t have the cash to pay bills. Also, are there payment discounts you’re missing by not paying more quickly? Days payable outstanding = (accounts payable x days in the time period) / costs of goods sold)
- 15. Days sales outstanding (DSO): This shows in days how quickly you collect payment from customers. A low number suggests you’re getting paid promptly. The caution: Could you be missing out on sales by not offering more and better credit? Days sales outstanding = (average accounts receivable in the time period / credit sales made in the time period) × number of days in the time period
Liability
These KPIs assess how well-equipped companies are to meet their debt payments, payroll, and other cash obligations.
- 16. Working capital: This measures the resources a company has at its disposal to meet short-term needs. This, along with operating cash flow, identifies solvency risks and whether pursuing growth opportunities could put the company at risk. If expressed as a ratio, current assets divided by current liabilities, it’s called the current ratio. Working capital = current assets – current liabilities
- 17. Quick ratio: This also measures the company’s ability to meet its short-term financial obligations. Quick ratio = (cash + marketable securities + accounts receivable) / current liabilities
- 18. Debt-to-equity ratio: This compares the company’s liabilities to its shareholder’s equity. A higher ratio means the company is financing more of its operations through debt, which could mean higher risk. Debt-to-equity ratio = company’s total liabilities / total shareholder equity
Sustainability
Sustainability KPIs increasingly influence investor decisions, regulatory compliance, and long-term financial performance.
- 19. Weighted average carbon intensity (WACI), by revenue: This takes total carbon emissions per every million dollars in revenue generated by a company. Downside is revenue can fluctuate a lot and vary company to company based on local market conditions. That can make it “an imperfect way of comparing the carbon efficiency of different companies operating in the same industry,” notes JPMorgan Chase, in its “Understanding carbon exposure metrics” report. WACI = tons of CO2 emissions / (revenue/$1 million)
- 20. Physical carbon intensity ratios (industry specific): These KPIs divide total carbon emissions by some physical output, such as bushels of corn, tons of copper extracted, or megawatt hours of electricity produced. Physical intensity analysis = tons of CO2 emissions / unit of production
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CFO KPI FAQs
What are some top priorities a CFO can track using KPIs?
The CFO can track vital performance factors, such as liquidity needed to meet short-term obligations, like debt payments and payroll, how long it takes to turn finished goods into cash, how well the company is using investors’ money to create profit, and how fast the company is growing in terms of sales and profit.
What are the most important capabilities of a CFO dashboard?
A CFO dashboard, first and foremost, must be accurate and up to date. After that, it must be able to display information clearly and quickly, present trends and changes in data over time, and be easily customizable and let the CFO drill down into details.
What KPIs are most important for a CFO’s dashboard to monitor often?
Quick ratio and current ratio are critical because they measure the company’s ability to meet near-term financial obligations.
What are the most important components to include in a CFO dashboard?
The most important elements for a CFO dashboard are revenue, costs, and profit; cash flow and cash positions; and return on capital.
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