> ## Content Index > Fetch the complete content index at: https://www.financealliance.io/llms.txt > Use this file to discover other available public pages before exploring further. # 32 powerful CFO KPIs to measure and master - URL: https://www.financealliance.io/32-cfo-kpis/ - Published: 2024-05-20T11:00:23.000Z - Updated: 2025-04-14T09:16:38.000Z - Description: This guide covers some of the most important CFO KPIs to track. First, we’ll look at the ones that'll give you a solid overview of the company’s financial health and performance. Then, we’ll move into the metrics used to measure your performance as the finance leader of the company. - Author: Sabrinthia Donnelly - Tags: Finance metrics, Articles, CFO, Career development These days, being a CFO is about *way* more than just reporting on finances. Yes, tracking cash flow, planning budgets, and letting everyone know how the company is performing financially is still a core part of the role. But CFOs are also key players in mapping out the strategies and plans of action to *hit* those financial targets. As a CFO, you've got to be clear on which specific metrics and KPIs give you the best snapshot of how the business is doing. And we're talking KPIs at two levels here: 1. 🏢 The **company-wide** **financial KPIs** that show overall money performance. 2. 🧍🏽**Personal KPIs** for you as the CFO to gauge how effectively you're doing your job. This guide covers 32 of the most *important* CFO KPIs to track. First, we’ll look at the ones that'll give you a solid overview of the company’s financial health and performance. Then, we’ll move into the metrics *your* superiors may use to measure your professional performance. --- ### Table of contents - [Company financial performance KPIs](https://www.financealliance.io/p/e4d5b70a-f83e-4dfe-8eb5-d6bdc3cfdab9/#company-financial-performance-kpis) - [CFO KPIs and performance metrics](https://www.financealliance.io/p/e4d5b70a-f83e-4dfe-8eb5-d6bdc3cfdab9/#cfo-kpis-performance-metrics-no2335) - [FAQs](https://www.financealliance.io/p/e4d5b70a-f83e-4dfe-8eb5-d6bdc3cfdab9/#faqs) --- ## Company financial performance KPIs The best way to understand and [assess your company’s financial performance](https://www.financealliance.io/3-important-things-about-financial-performance-analysis/) is by tracking the *right* CFO KPIs. We’ve divided the main ones into four categories: 1. **Revenue and profitability**: These KPIs track your [company’s revenue](https://www.financealliance.io/why-value-proposition-budgeting-is-key-to-boosting-revenue/) and the profitability generated from it. 2. **Operational:** Use these to assess how well your company is managing operations and controlling costs. 3. **Financial efficiency:** These look at how efficient your company is at leveraging assets to generate profits. 4. **Liability:** You can use these metrics to analyze how well your company manages debt, payroll, and [equity financing](https://www.financealliance.io/the-critical-role-of-financial-reporting-in-private-equity/). Below, we’ll describe the KPIs that CFOs commonly measure across each of these four categories. You can then use this breakdown to help decide which metrics you want to use to evaluate the financial position of your company. ***Note**: **Some of these may overlap and fit into another category just as easily. So, use your best judgment according to how you want to evaluate your company’s financial performance.* ## Revenue and profitability Revenue and profitability KPIs track the company's overall financial health and growth. These assess its ability to generate income, identify areas for cost optimization, and make informed decisions regarding things like pricing strategies, [resource allocation](https://www.financealliance.io/tips-to-allocate-budget-across-departments/), and growth initiatives. ### **1\. Revenue growth rate** Measures the increase or decrease in a company's revenue over some time. ***Revenue growth rate** **\= (Current period revenue - Prior period revenue) / Prior period revenue x 100* ### **2\. Gross profit margin** Shows the percentage of revenue remaining after deducting the cost of goods sold (COGS). ***Gross profit margin** *\= (Revenue - Cost of goods sold) / Revenue* ### **3\. EBITDA** This measures profitability by considering earnings before interest, taxes, depreciation, and amortization. ***EBITDA** *\= Net income + Interest + Taxes + Depreciation + Amortization* ### **4\. Compound annual growth rate (CAGR)** Calculates the annualized growth rate over multiple periods. ***CAGR** *\= (Ending value / Beginning value)^(1/no. of periods) – 1* ### **5\. Revenue variance analysis** Breaks down the difference between actual and budgeted revenue, identifying areas of under or even *over-performance*. ***Revenue variance** *\= Actual revenue – Budgeted revenue* ### **6\. Return on assets (ROA)** Reveals how efficiently a company generates profits from its assets. ***Return on assets** *\= Net income / Total assets* ### **7\. Net profit margin** Shows how much net income a company earns per dollar of revenue. ***Net profit margin** *\= (Net income / Revenue) x 100* ### **8\. Earnings per share** Calculates the portion of a company's profit allocated per outstanding share of stock. ***Earnings per share** *\= (Net income - Preferred dividends) / Average outstanding shares* --- ## Operational Operational KPIs are useful to gauge the efficiency and effectiveness of the company's day-to-day operations. They're used to pinpoint any bottlenecks, streamline processes, manage working capital, and more. ### **9\. Operating cash flow** Measures cash generated from core business operations. ***Operating cash flow** *\= Operating income + Depreciation - Taxes + Change in working capital* ### **10\. Cash conversion cycle (CCC)** This measures the average time it takes a company to convert its inventory and receivables into cash. ***Cash conversion cycle** *\= Days inventory outstanding + Days sales outstanding - Days payable outstanding* ### **11\. Accounts payable turnover** Indicates how many times (per a specific period) a company *pays* its accounts payable. ***Accounts payable turnover** *\= Cost of sales / Average accounts payable* ### **12\. Accounts receivable turnover** Shows how many times per period a company *collects* its accounts receivable. ***Accounts receivable turnover** *\= Net credit sales / Average accounts receivable* ### **13\. Budget variance** Compares actual performance and costs against what was budgeted. ***Revenue budget variance** *\= (Actual revenue-budgeted revenue)/ Budgeted revenue* --- ## Financial efficiency Financial efficiency KPIs measure how the company manages its financial resources and can tell you if it's doing so effectively. You'll turn to these KPIs when you want to assess capital structure, evaluate investment opportunities, and ensure optimal utilization of assets and capital to maximize shareholder value. ### **14\. Return on equity (ROE)** Measures profitability by calculating how much profit is generated with shareholders' invested money. ***Return on equity** *\= Net income / Shareholders' equity* ### **15\. Cash runway** Estimates how many months/years a company can continue operating before running out of cash. ***Cash runway** *\= Cash balance / Monthly operating cash burn rate* ### **16\. Days sales outstanding** Shows the average number of days it takes to collect payment after a sale. ***Days sales outstanding** *\= (Accounts receivable /Net credit sales) x Number of days* ### **17\. Days payable outstanding** Calculates the average number of days a company takes to pay its accounts payable. ***Days payable outstanding** *\= (Accounts payable x days in the time period) / Costs of goods sold)* --- ## Liability Liability KPIs are used to help manage the company's debt obligations and financial risk. CFOs use liability KPIs to measure how well the company can meet its short-term and long-term debt obligations. ### **18\. Working capital** This formula measures a company's liquidity and ability to meet short-term obligations with current assets. ***Working capital** **\= Current assets - Current liabilities* ### **19\. Quick ratio** Measures a company's ability to pay current liabilities with its most liquid assets. ***Quick ratio** *\= (Cash + Marketable securities + Accounts receivable) / Current liabilities* ### **20\. Debt-to-equity ratio** Compares a company's total debt to its shareholders' equity to evaluate financial leverage. ***Debt-to-equity ratio** *\= Total debt / Total shareholders' equity* --- [Business process optimization: 5 inefficiencies to eliminate5 process inefficiencies you should try to eliminate. By streamlining these areas, you can create a ripple effect of efficiency gains across the entire company.![](https://storage.ghost.io/c/a5/73/a5734519-d6ac-4b17-95b8-f7a3866730ab/content/images/size/w256h256/2021/06/FA_Icon_Colour--1-.png)Finance AllianceSabrinthia Donnelly![](https://storage.ghost.io/c/a5/73/a5734519-d6ac-4b17-95b8-f7a3866730ab/content/images/size/w1200/2024/05/Business-process-optimization.png)](https://www.financealliance.io/business-process-optimization/) --- ## CFO KPIs & performance metrics (No.21 - 32) The CFO KPIs we covered above are to track the company’s financial health. But there’s more to the story than that. As the CFO, you’re not just [measuring company KPIs](https://www.financealliance.io/5-essential-financial-kpis-every-fp-a-manager-should-track/). *You're* also measured based on your performance and output as CFO. CEOs and board members use metrics to help measure the performance of their team members, *including* the CFO. By knowing these personal "benchmarks," you can focus on things that'll help you grow in your career. ****Note**: CEOs will likely evaluate you using a mix of quantifiable financial results and qualitative leadership aspects. Here are some key areas they'll be looking at: ### **21\. Financial performance** At the end of the day, the company wants to see if you're delivering results or not. So, expect them to keep a close eye on those CFO key performance indicators that show whether you delivered on the financial targets they set for things like profit margins, cash flow, and [revenue growth](https://www.financealliance.io/saas-finance-strategies/). If those numbers *aren't* where they're supposed to be, you can bet they'll have some questions for you. ![](https://media.tenor.com/yy2cI_EeT-0AAAAC/so-many-questions-dr-roger-bentley.gif) ### **22\. Aligning strategies with company goals** Another area of interest will be if your financial plans line up with the company's bigger goals. For example, did your cost-cutting measures free up resources for growth initiatives? A top CFO must manage financial resources wisely (like optimizing revenue streams and minimizing risks). ### **23\. Leadership and vision** CFOs are often measured based on their [leadership](https://www.financealliance.io/operational-finance/) skills. The company wants to see how well you lead the finance team and whether you have the necessary people skills. Some of your main priorities to help showcase your leadership skills could include things like: - Guiding the team through periods of [change and transformation](https://www.financealliance.io/managing-complex-change-matrix/) - Building a strong team that thrives - Stepping into a mentorship role for junior team members - Communicating with clarity and patience - Leading by example *and* with integrity ### **24\. Problem-solving** Another big thing that leadership will assess when measuring your performance as a CFO is how well you troubleshoot problems. Senior management and the board want to know you're the type to get ahead of financial hiccups, spotting them early and putting a plan in place to deal with them. CEOs *love* a CFO who's always a few steps ahead. So, try to build your problem-solving skills and sharpen your critical thinking skills too. ### **25\. Risk management** The higher-ups know that curveballs can come out of nowhere in any industry. So when things happen unexpectedly, they're counting on *you* to have that sixth sense and see it coming from a mile away. ![](https://media.tenor.com/GV5A4pzkXmEAAAAC/supertroopers.gif) *That's* why they'll be poring over numbers like the debt-to-equity ratio and the company's credit rating. If *those* are looking dicey, it's a sign you might not be staying ahead of potential storms on the horizon. ### **26\. Cash flow management** The company needs to know you can keep the money flowing. So, expect that they'll assess your ability to manage cash flow. This includes making sure there's always enough money for bills, growth, and taking advantage of opportunities. A couple of tips to help keep up: - **Stay on top of your cash flow forecasting**. Having projections mapped out for the next six months or even the year can help you [anticipate any potential cash crunches](https://www.financealliance.io/3-cash-flow-forecasting-challenges/) *before* they happen. - **Don't sleep on your receivables.** You need to stay disciplined about invoicing and collections to keep that revenue stream steady. - **Be strategic about your payables**. Negotiate terms with vendors, but don't stretch payables so far that you end up straining relationships. ### **27\. Capital management** A great CFO isn't just about bringing in the money, it's about using it wisely. Those who'll be assessing your performance want to be sure you're putting money in *all* the right places. So, they'll look at how you allocate capital to different areas. Are you investing in projects that actually have legs to drive real growth? Can you make that dollar stretch further *without* sacrificing quality? These are the type of questions the company will need answers to. ### **28\. Stakeholder management** Being a great CFO isn't just about spreadsheets and bottom lines. It's about building relationships. So, take time to get to [know your stakeholders](https://www.financealliance.io/stakeholder-communication-plan/). Talk *their* language (in other words, try to use *less* finance jargon they may not understand). And, show them you understand their concerns and can explain complex financial matters in a way that makes sense - *that's* the kind of CFO who gets noticed. ### **29\. Budgeting** Seeing if you can allocate resources and ensure teams stay within their budgets is something that'll be closely monitored. This means allocating resources *strategically*, making sure each department has what it needs to succeed *without* going overboard. 💡 ****Pro tip:** Get buy-in from department heads during the budgeting process. Doing so will help you build a more ****collaborative approach** to the budgeting process. ### **30\. Financial reporting** Numbers are important, but stories resonate. CEOs rely on CFOs to [translate financial data](https://www.financealliance.io/how-to-tell-a-compelling-story-with-financial-data/) into clear, concise reports. Can you paint a picture of the company's financial health? Do your reports provide valuable insights for decision-making? A proficient CFO can utilize data to communicate the company's financial trajectory to internal and external stakeholders effectively. ### **31\. Forecast accuracy** CEOs value CFOs who can create [*accurate* financial forecasts](https://www.financealliance.io/how-to-improve-sales-forecast-accuracy/). They don't expect you to predict the exact future by any means. Still, they want you to use your financial expertise to anticipate trends and potential roadblocks. By providing reliable financial forecasts, you become a strategic partner to the business, helping it navigate the road ahead confidently. ### **32\. Financial accountability** A strong financial foundation requires a team effort. CEOs look for CFOs who can foster a culture of [financial accountability across the company](https://www.financealliance.io/financial-accountability/). Do employees understand the financial implications of their decisions? Can you implement processes to ensure responsible spending? A great CFO empowers *everyone* in the company to be financially responsible. --- ## FAQs: CFO KPIs How is CFO performance measured? CFO performance is usually measured by evaluating different areas of the role, such as how well they manage the company’s financial health and how effectively they contribute to achieving strategic goals. Some top CFO KPIs might include the accuracy of financial forecasting, the speed (and efficiency) of closing financial books, cost management, leadership qualities and more. What are two metrics a CFO should always monitor? The two metrics a CFO should always monitor depends on their industry. However, two really important metrics for the CFO are the Return on Investment (ROI) and Operating Cash Flow. ROI measures the profitability of investments and is crucial for assessing the efficiency of spending. Operating Cash Flow calcualtes the total cash generated by the company’s regular business operations, which is important for evaluating the company's liquidity and its ability to sustain and grow operations. Why are KPIs important in finance? KPIs are crucial in finance because they provide a quantifiable measure of performance and health within a company. How do you measure the success of a CFO? The success of a CFO can be measured through a blend of financial metrics, strategic achievements, and leadership effectiveness. Financially, success might be assessed via growth in revenue, improvement in profit margins, and the company's financial position. Strategically, the ability to contribute to significant business decisions, manage risks effectively, and innovate in financial practices are key markers. Leadership can be evaluated through team performance, retention rates, and the development of strong relationships both internally and externally. What ratios do CFOs use? CFOs often use financial ratios such as the Debt-to-Equity Ratio and the Current Ratio. These help CFOs ensure the company maintains a healthy balance between its obligations and the resources available to meet them. --- [ ![](https://storage.ghost.io/c/a5/73/a5734519-d6ac-4b17-95b8-f7a3866730ab/content/images/size/w1600/2022/05/FA_Website_Banners_1.jpg) ](https://www.financealliance.io/community/)