The conversion rate is the number of new customers divided by the number of qualified leads. This will tell you the speed at which your potential customers convert into customers. Revenue concentration helps you identify how much revenue each customer or project produces for your company as a percentage of your total revenue. With this financial KPI, you can determine the ROI of each customer.
The calculation of revenue concentration begins with the analysis of your revenue streams. Your FreshBooks dashboard provides summaries of your revenue streams at a glance, making it easy to analyze them by customer or service. The net profit margin measures the amount of profit your company makes after expenses. This includes operating expenses (such as rent and utilities) and non-operating expenses (such as taxes and debt payments).
Accounts receivable turnover %3D Net annual credit sales í· Average number of accounts receivable Initial receivables (+ final receivables) í· 2 When calculating the turnover of your accounts receivable for a year and dividing 365 days by the number of times a year your AR is delivered, you'll see on average how many days it takes to receive payments. The higher your receivables turnover, the fewer overdue bills there will be on average in your accounts and the better your cash flow will be. It can also indicate that you have an efficient process for collecting payments from customers. As a business owner, you need cash to operate.
This cash is called working capital and helps you meet your short-term financial obligations that keep your daily operations going. Understanding your working capital ratio will help you plan your future strategic moves, such as hiring new team members to expand your business or investing in new equipment. It will also let you know when you need funding to keep your business moving forward.