The most important key figures for SMEs

To measure the success of a company, many businesses use key figures. The most important key figures can be categorized as profitability ratios, liquidity ratios, or safety ratios.

Key Figures Measure Business Success

How do entrepreneurs know if their company has sufficient liquid funds, how long goods typically remain in inventory, or how good the annual profit is? The answer to all these questions is: key figures. They help assess the success of a company and indicate to entrepreneurs what went well in a fiscal year and where adjustments are needed. The basis of a key figure analysis is usually the annual financial statements. Once these have been checked and cleaned up, it is important to select and determine the right key figures.

Most Important Key Figures for SMEs

In practice, a whole catalog of key figures is applied. Which figures are relevant must be decided by each company for itself. The most common key figures can, however, be assigned to one of three categories: profitability ratios, liquidity ratios, or safety ratios.

Profitability Ratios

Profitability ratios show how profitable or efficient a company is in its business activities. These include:

Liquidity Ratios

Liquidity ratios are used to assess how liquid or cash-rich a company is. These include:

Safety Ratios

Safety ratios show the level of financial risks a company undertakes. These include:

Problems with Key Figure Analysis

Key figures are an important tool for assessing business success. However, a meaningful key figure analysis requires that the underlying figures in the annual accounts are correctly determined. Additionally, a key figure analysis is only helpful if the right key figures for business operations are selected. Finally, a key figure analysis only allows for the assessment of quantifiable matters. Other relevant topics, such as employee satisfaction or a company's innovative capacity, are not examined. Despite these limitations, key figures help entrepreneurs form an overall judgment on the economic situation of a company.

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