The key ratios every manager should monitor: a practical guide to assessing company performance
Most Portuguese companies, especially SMEs, are managed based on simple indicators: revenue, cash balance, and last year’s profit. These figures are important, but they only tell part of the story. Management ratios make it possible to turn accounting and operational information into clear signals about: the ability to meet commitments, the real profitability of the business, efficiency in the use of resources, level of financial risk, and the sustainability of growth.
More than figures for the accountant, these are practical tools to assess the company’s health and support better decision-making. Below are some of the main ratios used to evaluate business performance.
1. Liquidity and cash flow ratios
2. Profitability ratios
3. Operational efficiency ratios
4. Capital structure and leverage ratios
Conclusion
Ratios allow managers to turn financial data into decisions.
More important than memorising formulas is to monitor results and implement improvement actions.
Download our file to calculate your company’s ratios and obtain the corresponding score. Based on this result, our Economic-Financial Thermometer will indicate the current state of your business’s financial health.
