The health of any business is of chief importance. When we think of the health of our bodies, we talk in terms of “vitals”- our blood pressure, temperature, heart rate, etc. Measuring the health of a business is very similar; key indicators like liquidity, debt to assets ratios, and many others are quickly worked up and presented and meant to represent how well a business is doing.
So, what are the specific vitals most often used to track the standing of a company? According to Forbes, the key performance indicators (KPI’s) that best represent the overall standing of a business, good or bad, are:
- Net Profit Before Tax (represents the profit per one dollar of sales)
- Current and Quick Ratios (represents the cash liquidity of the company)
- Accounts Payable Days and Accounts Receivable Days (Measures whether there is cash on hand to cover commitments)
- Inventory Days (outlines the number of days it takes to move inventory)
However daunting the task of measuring and recording these indicators may seem, there is a wealth of knowledge out there on how to calculate these numbers and interpret them, which may be even more important. Generally, businesses who employ accountants or financial advisors will have these numbers presented to them quarterly.
While financial indicators will continue to be highly regarded until the end of time, some other more culturally focused metrics have come to the forefront when discussing the health of a company. Various businesses find themselves looking at content as currency and page views, engagement, and social followings as vital KPI’s.
Because customers have such easy access to the companies they buy goods or services from via social media, company websites, and forums- online presence has become as highly regarded form of well-being. A healthy company now encompasses much more than liquid assets- they have good reviews from those they’ve worked with, up-to-date google pages, optimized websites, and post content relevant to their target markets.
It is safe to say that companies operating today are not able to rely solely on quantitative data when looking at their businesses under the scope of reality.