The conversion rate is the number of new customers divided by the number of qualified leads. That will tell you the speed at which your potential customers convert into customers. Revenue concentration helps you identify how much revenue each client or project generates for your company as a percentage of your total revenues. With this financial KPI, you can determine the ROI of each customer.
The calculation of the concentration of income begins by analyzing the sources of income. Your FreshBooks dashboard provides summaries of your revenue streams at a glance, making it easy to analyze them by customer or service. The net profit margin measures the amount of profit your company earns after expenses. This includes operating expenses (such as rent and utilities) and non-operating expenses (such as taxes and debt payments).
Accounts receivable rotation %3D Net annual credit sales i· Average receivables (initial receivables + final receivables) i· 2 When calculating the billing of your receivables for a year and dividing the 365 days by the number of times a year that your AR is renewed, you will see how many days, on average, it takes to receive payments. The higher your receivables are billed, the lower the average number of overdue invoices in your accounts and the better your cash flow. It can also indicate that you have an efficient process for collecting payments from customers. As a business owner, you need cash to operate.
This cash is called working capital and helps you meet your short-term financial obligations that allow you to maintain your daily operations. Understanding your working capital ratio will help you plan your future strategic moves, such as hiring new team members to expand your business or investing in new equipment. It will also let you know when you need funding to keep your business moving forward.