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What are Key Performance Indicators (KPI)?

A Key Performance Indicator (KPI) is essentially a performance measurement.  A KPI is a metric typically used on a business to assist on measuring its performance.


Popular KPI for accounting and financial management include:

Revenue Growth:  This is a measurement of how well an organisation grows its fee / sales base.  It is calculated by taking the difference between the current sales amount to the previous sales amount and dividing by the previous sales amount.

Gross Margin %:  Gross margin is net sales less the cost of goods sold.  Generally selling and administration expenses are disregarded.  The gross margin percentage is calculated as (Net sales – Cost of goods sold) / Net sales.

Overhead %:  Can be calculated as total overheads / total revenue.

EBIT %: Can be calculated and earnings before interest and tax (EBIT) / revenue.

EBITDA: Earnings before interest and tax / (EBIT) + Depreciation & Amortisation.

Net Profit %: Net profit after tax / revenue.