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2

What are most important formulas / KPIs / ratios in profitability cases /market entry / growth

Dear community,

I would like to know which common ratios you would defintely recommend in order to make relevant judgements in certain case structures?

For example Proft Margin Ratio (Margin % = (Revenue per unit - costs per unit) / Revenue per unit)) which can then be further analzed in Old Margin vs. New Margin in profitablity cases. Which other ratios / KPIs would you recommend are useful to know for certain case strctures? (e.g. CAGR, ROI, IRR. )

Dear community,

I would like to know which common ratios you would defintely recommend in order to make relevant judgements in certain case structures?

For example Proft Margin Ratio (Margin % = (Revenue per unit - costs per unit) / Revenue per unit)) which can then be further analzed in Old Margin vs. New Margin in profitablity cases. Which other ratios / KPIs would you recommend are useful to know for certain case strctures? (e.g. CAGR, ROI, IRR. )

2 answers

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Best Answer

Dear A,

Actually, you've already mention the basic ones. To make you lesi full I would add the following:

• Break-even Calculation = Fixed Cost / Contribution Margin; Fixed Cost / (Price – Variable Cost)

• Debt Ratio = Total Debt / Total Assets

• Debt-to-Equity Ratio = Total Debt / Total Equity

• Four Cs (marketing from a customer’s point of view): Convenience, Cost to the user, Communication, Customer needs and wants

• Four Ps (starting or expanding a business): Product, Price, Place, PromotionGross Profit = Sales – Cost of Goods Sold
Gross Profit Margin = Gross Profit / Total Revenue

• Profit = Total Revenue – Total Costs
• Return on Assets = Net Income / Total Assets
• Return on Equity = Net Income / Shareholder’s Equity
• Return on Investment = Net Income / Initial Investment
• SWOT Analysis: Strengths, Weaknesses, Opportunities, ThreatsTotals Costs = Fixed Costs + Variable Costs
• Total Revenue = Price x Volume

Hope it helps,

Best,

André

Dear A,

Actually, you've already mention the basic ones. To make you lesi full I would add the following:

• Break-even Calculation = Fixed Cost / Contribution Margin; Fixed Cost / (Price – Variable Cost)

• Debt Ratio = Total Debt / Total Assets

• Debt-to-Equity Ratio = Total Debt / Total Equity

• Four Cs (marketing from a customer’s point of view): Convenience, Cost to the user, Communication, Customer needs and wants

• Four Ps (starting or expanding a business): Product, Price, Place, PromotionGross Profit = Sales – Cost of Goods Sold
Gross Profit Margin = Gross Profit / Total Revenue

• Profit = Total Revenue – Total Costs
• Return on Assets = Net Income / Total Assets
• Return on Equity = Net Income / Shareholder’s Equity
• Return on Investment = Net Income / Initial Investment
• SWOT Analysis: Strengths, Weaknesses, Opportunities, ThreatsTotals Costs = Fixed Costs + Variable Costs
• Total Revenue = Price x Volume

Hope it helps,

Best,

André

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Hi,

Basically, you've listed the basic ones.

There is a number of industry-specific ones like ARPU or Revenue per sqm. I recommend downloading the annual reports for investors of the top companies in each industry (retail, cpg, banking, etc) and check the metrics and KPIs they are using. It will answer all your questions.

Best

Hi,

Basically, you've listed the basic ones.

There is a number of industry-specific ones like ARPU or Revenue per sqm. I recommend downloading the annual reports for investors of the top companies in each industry (retail, cpg, banking, etc) and check the metrics and KPIs they are using. It will answer all your questions.

Best