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KPI Checklist
Finance & Control
10 essential financial KPIs — each with a definition, formula, sector benchmarks and a concrete Power BI implementation tip. Built for SMEs in wholesale, manufacturing and professional services.
10
Finance
KPIs
KPIs
Why these KPIs?
From reporting to decision-making
Most SMEs produce a monthly P&L — but rarely track the ratios that make the numbers meaningful. Margin looks fine until working capital dries up. Solvency looks healthy until the bank reassesses. Den Otter Solutions compiled these 10 KPIs based on 25+ years of executive experience in finance, operations and supply chain.
Profitability
Gross margin and EBIT margin — the two KPIs that tell you whether the business model itself is sound.
Liquidity & working capital
Current ratio, quick ratio, DSO and working capital percentage — the KPIs that show whether the business can pay its way.
Solvency & efficiency
Solvency ratio, ROE, operating cost ratio and bad debt — the KPIs that determine long-term financial resilience.
The KPIs
10 finance & control KPIs — explained
Click any KPI to see the definition, formula, sector benchmarks and Power BI implementation tip.
Profitability
Liquidity
Receivables
Efficiency
Solvency
01
Gross Margin
Difference between net revenue and COGS, as a % of net revenue.
Profitability
Definition & why measure
The difference between net revenue and cost of goods sold (COGS), expressed as a percentage of net revenue.
Gross margin is the foundation of profitability. A margin that is too low cannot be rescued by cost savings — the basic economics are broken before overhead is even considered.
Formula
(Revenue − COGS) ÷ Revenue × 100%Benchmark by sector
Wholesale
15–30%
Manufacturing
20–45%
Prof. services
50–80%
What does this KPI tell you?
A gross margin of 20% at a wholesaler is healthy. At a manufacturer with the same margin, there is likely a pricing or cost problem worth investigating. Always compare within the sector — not against the number alone.
Power BI implementation tip
Calculate per product group, customer segment and period. Show margin trend per quarter to signal early whether input cost increases are not being passed on to customers.
02
EBIT Margin (Operating Profit Margin)
Operating profit before interest and tax as a % of net revenue.
Profitability
Definition & why measure
Operating profit before interest and tax divided by net revenue. The measure of operational profitability.
EBIT margin shows whether the business is operationally profitable, independent of financing structure and tax position. Essential for comparing businesses across sectors and ownership structures.
Formula
Operating profit (EBIT) ÷ Net revenue × 100%Benchmark by sector
Wholesale
2–5%
Manufacturing
5–10%
Prof. services
10–20%
What does this KPI tell you?
An EBIT margin of 3% at a wholesaler is thin but acceptable. At a services firm, that same 3% is a warning sign. Always compare within the same sector — cross-sector comparisons mislead more than they inform.
Power BI implementation tip
Show monthly EBIT margin as a line chart with the annual average as a reference line. Combine with revenue volume to verify whether margin improvements are genuinely structural or driven by a single good month.
03
Current Ratio
Current assets divided by current liabilities. Short-term liquidity measure.
Liquidity
Definition & why measure
The ratio of current assets to current liabilities. Measures the ability to meet short-term payment obligations.
A current ratio below 1.0 means current liabilities exceed current assets — a direct liquidity risk. Banks typically require 1.5 as a minimum for SME lending and overdraft facilities.
Formula
Current assets ÷ Current liabilitiesBenchmark by level
Minimum
≥ 1.0
Healthy
≥ 1.5
Comfortable
≥ 2.0
What does this KPI tell you?
A ratio of 2.0 sounds safe but may mean too much capital is tied up in inventory or slow-paying receivables. Always combine with the quick ratio — the difference between the two reveals how much liquidity depends on selling stock.
Power BI implementation tip
Show current ratio as a monthly gauge with thresholds at 1.0 and 1.5. Combine with inventory movement and receivables balance to identify the cause of fluctuations — not just the fact of them.
04
Quick Ratio (Acid-Test Ratio)
Current assets minus inventories divided by current liabilities.
Liquidity
Definition & why measure
Current assets minus inventories, divided by current liabilities. A stricter liquidity measure that excludes inventory — which cannot be quickly converted to cash.
The quick ratio shows whether a business can meet its short-term obligations even without selling inventory. Particularly relevant when stock is seasonal, illiquid or slow-moving.
Formula
(Current assets − Inventories) ÷ Current liabilitiesBenchmark by level
Risk
< 0.8
Adequate
≥ 1.0
Healthy
≥ 1.2
What does this KPI tell you?
At inventory-heavy businesses (wholesale, manufacturing), the quick ratio is often lower than the current ratio. A gap larger than 0.5 between the two deserves closer examination — it means liquidity is dependent on selling stock fast.
Power BI implementation tip
Show current ratio and quick ratio side by side. A large gap reveals how much liquidity depends on selling inventory — that is a concentration risk worth tracking over time.
05
Days Sales Outstanding (DSO)
Average number of days customer invoices are outstanding before payment.
Receivables
Definition & why measure
The average number of days customer invoices remain outstanding before payment is received.
High DSO extends the cash conversion cycle and increases the need for working capital financing. Every day reduction in collection time is direct liquidity improvement.
Formula
(Receivables ÷ Net revenue) × 365Benchmark by sector
Wholesale
30–45 days
Manufacturing
30–60 days
Prof. services
45–75 days
What does this KPI tell you?
A DSO of 60 days against a 30-day payment term means customers take twice as long to pay on average. One quarter of annual revenue is permanently outstanding — and financing that gap costs money.
Power BI implementation tip
Segment receivables by age: 0–30, 31–60, 61–90, over 90 days. Show trend per customer group to identify where payment behaviour is deteriorating — before it becomes a write-off risk.
06
Bad Debt Ratio
% of revenue written off as uncollectable receivables.
Receivables
Definition & why measure
The percentage of revenue that proves uncollectable — written-off or credited receivables as a percentage of total net revenue.
Every euro of bad debt is direct margin destruction. A bad debt ratio of 2% at a 10% margin destroys 20% of profit — before management has noticed anything unusual.
Formula
(Bad debt ÷ Net revenue) × 100%Benchmark by level
Excellent
< 0.5%
Acceptable
< 1.5%
Concerning
> 2%
What does this KPI tell you?
The bad debt ratio often rises as an indicator of credit risk or a deteriorating customer portfolio before revenue problems become visible. It is an early warning signal — the kind that is worth acting on early.
Power BI implementation tip
Link to customer segments and sectors. If a specific sector or customer group consistently produces more bad debt, that is input for credit limit policy — address the structure, not just the symptoms.
07
Operating Cost Ratio
Total operating costs (excl. COGS) as a percentage of net revenue.
Efficiency
Definition & why measure
Total operating costs (excluding COGS) divided by net revenue. A measure of operational cost efficiency.
A rising cost ratio at flat revenue is an early signal of lost scale benefits or cost drift. Essential to monitor during both growth and contraction — the direction matters as much as the number.
Formula
Operating costs (excl. COGS) ÷ Net revenue × 100%Benchmark by level
Excellent
< 15%
Average
15–25%
High
> 25%
What does this KPI tell you?
A cost ratio of 20% against a gross margin of 25% leaves only 5% EBIT margin. Small overruns have a large effect on the bottom line — every extra percentage point of costs is direct profit erosion.
Power BI implementation tip
Break operating costs into personnel, premises and other. Show each category's share as a stacked bar chart per period — immediately visible which cost driver is pushing the ratio up and where to focus.
08
Solvency Ratio (Equity / Total Assets)
Equity as a percentage of total assets. Financial independence measure.
Solvency
Definition & why measure
Equity as a percentage of total assets. Measures financial independence and the capacity to absorb losses.
Low solvency makes a business vulnerable when results disappoint. Banks typically apply 25–30% as the minimum threshold for SME lending and credit facilities.
Formula
Equity ÷ Total assets × 100%Benchmark by level
Minimum
20–30%
Solid
30–50%
Strong
> 50%
What does this KPI tell you?
A solvency ratio of 35% is healthy for most SMEs. Many family businesses target above 50% for financial independence — so a bank cannot veto strategic decisions about acquisitions, capex or ownership structure.
Power BI implementation tip
Show solvency as an annual trend chart alongside return on equity. If solvency falls but profit rises, that is deliberate leverage policy. If both fall simultaneously, action is needed.
09
Return on Equity (ROE)
Net profit as a percentage of average equity.
Efficiency
Definition & why measure
Net profit as a percentage of average equity. Measures the return that owners or shareholders earn on their investment.
Return on equity shows whether the business generates a better return than alternative investments. Below the risk-free rate, it is a signal to reconsider capital allocation decisions.
Formula
Net profit ÷ Average equity × 100%Benchmark by level
Minimum
5–10%
Good
10–20%
Excellent
> 20%
What does this KPI tell you?
An ROE of 15% is a solid benchmark for most SMEs. Above 25% is exceptional and often not sustainable without scale advantages or high financial leverage — both worth understanding before celebrating the number.
Power BI implementation tip
Decompose ROE using DuPont analysis: net margin × asset turnover × financial leverage. This shows exactly which driver is determining ROE and where improvement has the most impact.
10
Working Capital as % of Revenue
Required working capital as a percentage of net revenue.
Liquidity
Definition & why measure
Required working capital (inventories + receivables − payables) expressed as a percentage of net revenue. Measures the capital intensity of the business.
High working capital requirements demand more financing during growth. Every percent of revenue increase requires proportionally more liquidity — without adequate financing, growth creates cash pressure rather than value.
Formula
(Inventory + Receivables − Payables) ÷ Net revenue × 100%Benchmark by level
Low
< 10%
Average
10–20%
High
> 20%
What does this KPI tell you?
Working capital of 15% on €2M revenue means €300,000 permanently tied up. Growth to €3M raises this to €450,000. That funding gap has to come from somewhere — it rarely appears automatically.
Power BI implementation tip
Show working capital trend alongside revenue growth. If working capital grows faster than revenue, there is inefficiency in receivables management, inventory control or payables policy — pinpoint which one is driving the gap.
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Frequently asked questions
Finance KPIs in Power BI — questions & answers
Which financial KPIs are most important for an SME dashboard?
For an SME finance dashboard, gross margin, EBIT margin and DSO are the three most critical starting points. Gross margin validates whether the business model works; EBIT margin shows operational profitability; DSO shows how quickly cash returns. Den Otter Solutions implements these three as the standard finance baseline — and builds outward based on specific management needs.
How do I build a finance dashboard in Power BI?
A finance dashboard in Power BI starts with connecting the accounting system — commonly Exact, AFAS, Twinfield or similar. Den Otter Solutions maps the chart of accounts to a star schema model, builds the KPI measures and translates the 10 KPIs on this page into an interactive management dashboard. The result: a live P&L, balance sheet ratios and cash flow indicators in one view.
What is a healthy solvency ratio for an SME?
A solvency ratio between 30–50% is healthy for most SMEs. Banks typically use 25–30% as the minimum for lending. Many family businesses target above 50% to maintain financial independence and avoid giving banks a veto on strategic decisions. Den Otter Solutions tracks solvency trend alongside ROE — so management sees whether changes are deliberate policy or a warning sign.
How long does it take to build a finance dashboard in Power BI?
A management finance dashboard covering these 10 KPIs typically takes 3–5 working days with clean data from a single accounting system, or 5–8 days with multiple entities or consolidation requirements. Den Otter Solutions always starts with a Data Start Scan to assess the current data state and chart of accounts structure — before writing a single line of DAX.
Ready to put these KPIs to work
in your organisation?
Den Otter Solutions builds finance dashboards for SMEs. From accounting system connection to management dashboard — including all 10 of these KPIs built out in your own Power BI environment.