KEY PERFORMANCE INDICATORS ( KPIs)




KPIs

The KPIs or the Key Performance Indicators should be defined for measuring the performance of a team or a division or the company against some benchmark  The benchmark can be the industry benchmark or the company's other location benchmark

How should we define KPIs

KPIS should be defined as a product or result of dividing two components of business elements and we should not make it too derivative as then the reason for non conformity with the benchmark may be sometimes compensating resulting in no benefit of measurement

All KPIs must be measured on same units . So for example all Financial KPIs must be measured as Million and not some as Million and some as Billion .

The KPIs must  have a range for Very Good , Good , Fair and Bad

Identify KPIs to use and Number of KPIs

There are hundreds of KPIs defined and we need to chose the most relevant ones to focus on depending on the stage that we are in , the industry and our financial condition and goal.

As a thumb rule no Dash Board should have more than 10 to 12 KPIs .

Now if we are defining KPIs for business it can be 10 to 12

and for each division it cannot be more than 5 to 7.


Some of the most common and powerful KPIs that are used are

 FINANCIAL

PROFIT & LOSS

Operating Margin : This gives us the margin that we make on product or service before any overheads . This dives us an idea that if we make a 10 % margin and and our overhead is Rs 1 cr we need to sell Rs 10 cr to break even .

Break Even Point : The revenue at which the company would be able to recover all its fixed costs and would be at NIL profit or loss

Net Profit or EBIDTA Margin : EBIDTA or Net Profit / Sales .

Overhead to Gross Margin Ratio : The ratio between Gross Margin and Overheads to see the Margin of Safety or Margin of Risk

Cash Burn Rate and  Time : The monthly cash loss and Time till the operations can run with the cash loss and the Money available.


BALANCE SHEET

Asset Turnover Ratio : This ratio is computed by diving the Turnover by Total Assets of the company.

Generally higher the ratio the company is operating better. In today's time when technology is changing the assets ( read machines productive every six months ) huge investments are not warranted in assets . If we look at some of the most successful businesses like Apple , Air Bnb , Uber etc they are Asset light models.

DSO : The amount of money outstanding with customers in terms of sales per day

Current Ratio : Ratio of Current Assets and Current Liabilities to see the Liquidity , it should at least be 1.33


OPERATING

Productivity

Defects per 100 or 1000

Manpower Available against Manpower Planned

Overtime

Break Down

Non Planned Maintenance

Sales

New Customers Added in Pipeline

Conversion from Pipeline to Actual Sales

Sales Person wise New Sale



Comments

Post a Comment

Popular posts from this blog

The 10 Worst Corporate Accounting Scandals of All Time

The 10 Worst Corporate Accounting Scandals of All Time If there is one theme to rival terrorism for defining the last decade-and-a-half, it would have to be corporate greed and malfeasance. Many of the biggest corporate accounting scandals in history happened during that time. Here's a chronological look back at some of the worst examples. Waste Management Scandal (1998) Company: Houston-based publicly traded waste management company What happened: Reported $1.7 billion in fake earnings. Main players: Founder/CEO/Chairman Dean L. Buntrock and other top executives; Arthur Andersen Company (auditors) How they did it: The company allegedly falsely increased the depreciation time length for their property, plant and equipment on the balance sheets. How they got caught: A new CEO and management team went through the books. Penalties: Settled a shareholder class-action suit for $457 million. SEC fined ArthurAndersen $7 million. Fun fact: After the scandal, new CEO A. Maurice
4/wLd0NX21CfvbYeZ-InqTeU05UmnUL3jxxlFbk4s2nS4

THE TOP TEN SPORTS PLAYED ALL OVER THE WORLD AND THE ECONOMICS OF FIFA WORLD CUP

Image
SPORTS The Top 10 Sports played all over the world and the population involved and locations are as follows ECONOMICS OF FIFA WORLD CUP REVENUE There are several different streams of income for world football’s governing body as it seeks resources to touch the world, develop the game and build a better future. FIFA enjoyed a great period of success in the four-year cycle between 2007 and 2010, with revenue rising to USD 4,189 million, up significantly from the figure of USD 2,634 million from the previous four-year cycle. While costs also rose, they remained firmly in control, enabling FIFA to make an extremely healthy result of USD 631 million. Ninety-three per cent of FIFA’s income during this period was accounted for by event-related revenue. The biggest event of them all proved the biggest fundraiser: the 2010 FIFA World Cup South Africa™ made USD 2,408 million of FIFA’s USD 2,448 million through the sale of television rights, and USD 1,072 million of its USD 1,09
4/wLd0NX21CfvbYeZ-InqTeU05UmnUL3jxxlFbk4s2nS4

STANDARD OPERATING PROCESSES

CONSOLIDATION AND FINALIZATION The various other activities carried out by the accounting team falls under this category . They can ve broadly classified as 1. Accounting for Depreciation 2. Accounting for Tax Provisioning and Payments 3, Accounting for Overheads 4. Maintenance of Bank and Cash Accounts 5. Investment Accounting 6. Other Income Accounting 7. Accrual and Prepaid Accounting 8. Payroll Accounting
4/wLd0NX21CfvbYeZ-InqTeU05UmnUL3jxxlFbk4s2nS4