What they are and how to measure Comparison

(What they are and how to measure)

Comparison Priorities Decisions Communication

Public Company Stock Market Departments Personnel Performance Management

Usage Predictive Forecasting

Other Companies IT Management Staff

Who should determine the appropriate KPI’s for a company?

Where to get KPIs Given • • Quick Pre-defined IT can manage Save time and effort Some Adoption Short lived Developed • • Participation Discovery Commitment Belief Full Adoption Longevity

Employees Stakeholders

Debt Asset Management Cash Flow Indicators Market Value

DEBT Asset Coverage Ratio Capitalization Ratio Debt Service Coverage Ratio Debt-to. Equity Ratio

DEBT Debt-to. Income Ratio Debt/EBITDA Ratio Equity Multiplier Financial Leverage Fixed Assets to Net Worth

DEBT Long Term Debt to Capitalization Ratio Fixed Charge Coverage Ratio Interest Coverage Ratio (ICR)

LIQUIDITY Acid-Test Ratio Cash Ratio Current Ratio Net Working Capital Quick Ratio

LIQUIDITY Working Capital Ratio

FINANCIAL Cash Return on Capital Invested (CROCI) Du. Pont Formula Earnings Before Interest After Taxes (EBIAT) EBIT (Earnings Before Interest and Taxes) EBITDA

FINANCIAL EBITDARM EBT (Earnings Before Tax) Effective Rate of Return Gross Profit Margin Net Profit Margin

FINANCIAL NOPLAT (Net Operating Profit Less Adjusted Taxes) OIBDA Operating Expense Ratio Operating Margin Overhead Ratio

FINANCIAL Relative Return Profit Analysis Profitability Index Return On Assets (ROA) Return on Average Assets (ROAA)

FINANCIAL Return on Average Capital Employed (ROACE) Return on Average Equity (ROAE) Return On Capital Employed (ROCE) Return on Debt (ROD) Return On Equity (ROE)

Return On Invested Capital (ROIC) Return on Investment (ROI) Return on Net Return on Assets Research (RONA) Capital (RORC) Return on Retained Earnings (RORE) FINANCIAL

FINANCIAL Revenue per Employee Return on Revenue (ROR) Return On Sales (ROS)

Accounts ASSET Payable Asset Turnover MANAGEMENT Turnover Ratio Cash Conversion Cycle (Operating Cycle) Days Payable Outstanding (DPO) Days Sales Outstanding (DSO)

ASSET MANAGEMENT Defensive Interval Ratio (DIR) Inventory Turnover Receivable Turnover Ratio Fixed Asset Turnover

CASH FLOW INDICATOR Cash Flow Coverage Ratio Cash Flow Management Cash Flow Return on Investment (CFROI) Free Cash Flows / Operating Cash Flows Ratio Price / Cash Flow Ratio

MARKET VALUE Dividend Policy Ratios Business Valuation Dividend Payout Ratio Dividend Yield Enterprise Value (EV)

MARKET VALUE Enterprise Value Multiple Gordon Growth Model Net Asset Loan-to-Value per Ratio (LTV) Share (NAVPS) EV/EBITDA ratio

MARKET VALUE PEG ratio Price-to. Research Ratio Price/Book Value Ratio Price to Earnings Ratio (P/E Ratio)

Pick the right ones for your business

Gartner /EBRC KPI Initiative AICPA KPMG, Deloitte, PWC

From Sales to Professional Services Approximately 30 Measures Found All are valid… Narrow the focus… 3 are important

Top 3 Take-Aways § § Multiple People Multiple Departments § How and when will they be used § § § Keep it simple The result is more important than the tool It is NOT a techie solution

questions? final thoughts?