Innovative Financial Advisors Pvt. Ltd (Fiinovation), is a leading research and advisory firm that offers expertise in the corporate social responsibility (CSR) and sustainability domain. According to Fiinovation, financial performance is very important because understanding essential financial performance is the first step that leads you to where you are. Fiinovation family working on many solutions are Analytics, grant management, programme management, proposal research laboratory, and project optimization. The primary focus of fiinovation practice areas is health, education, livelihood skills, and environment. Fiinovation believes that mentioned CSR trends are more impactful for 2020. For this, key performance indicators are also important to reach the particular target but not all KPI’s are suitable for the firm, there are some few KPIs used for business. It depends on firm strategies on how to make use of KPIs. To determine this, you should consider where your business currently stands and its future strategy (i.e. have you created products yet? Are you expanding? Downsizing? etc.). Then, you’ll want to make sure that you have both leading and lagging indicators to measure performance. Fiinovation CEO Dr. Soumitro Chakraborty and his team are working for new upcoming projects and are also honoured with many awards for their work. You can see reviews on Fiinovation glassdoor.
Financial performance is defined as, “Financial performance is a subjective measure of how well a firm can use assets from its primary mode of business and generate revenues. The term is also used as a general measure of a firm's overall financial health over a given period.” There are many ways to understand the financial measures, but before understanding financial measures let's understand KPIs. KPI stands for Key performance indicator, there are several methods included in KPIs such as operating cash flow, debt to equity ratio, current ratio, days sales outstanding, working capital, accounts payable turnover, accounts receivable turnover, inventory turnover, return on equity, and customer satisfaction. A key performance indicator is a measurable value that demonstrates how effectively a company is achieving key business objectives. Organizations use KPIs at multiple levels to evaluate their success at reaching targets. High-level KPIs may focus on the overall performance of the business, while low-level KPIs may focus on processes in departments such as sales, marketing, HR, support and others.
According to solvexia, Some KPIs for financial performance,
1. Operating Cash Flow: Knowing how much cash you have on hand lets you know that you can pay for operating expenses and incoming inventory. Beyond how your business is functioning today, you can use operating cash flow in comparison to capital investments to see how you can move your business forward.
2. Current Ratio: This is the ratio between your assets over your liabilities. It allows you to understand solvency and ensure that you have a good enough credit rating to expand.
3. Debt to Equity Ratio: Your business has likely relied on investors and shareholders with a stake in your overall financial health. To make sure that you can protect their investment, you want to regularly check in with your total liabilities against your shareholder’s equity. To remain transparent and be held accountable, it’s a KPI that your shareholders will want to stay abreast of. Automation technology makes it easy to share reports with all those who need to see them automatically.
4. Days Sales Outstanding: DSO defines the average sales collection period. This KPI is not only useful to you as CFO, but your whole team can also use it to understand how to incentivise people to pay faster. Your marketing and sales team should be aware of this KPI always, especially when introducing new campaigns. This is why it’s essential to have accessible dashboards, so every team member can pull insights they need for their own decisions that will affect the business’ bottom line.
5. Working Capital: If you subtract your current liabilities from your existing assets, you have your working capital. This will let you know if you have what you need to take care of short-term liabilities.
6. Accounts Payable Turnover: Your cash flow is affected by when and how many times you pay vendors. This is known as your accounts payable turnover.
7. Accounts Receivable Turnover: Going hand-in-hand with accounts payable turnover is accounts receivable turnover, or how often you collect money that is owed. It may be the case that you are running into issues raising money, and that will affect your cash flow. To better understand if your business process is right or if you may need business process improvement, you should regularly monitor this situation with the help of automated means.
8.Customer Satisfaction: The KPI of customer satisfaction can be gleaned by calculating customer responses from surveys.
9. Inventory Turnover: By dividing your current average sales by your current average inventory in the same period, you get an idea of your inventory turnover. You don’t want to hold too much inventory as a liability, nor do you want to be short to satiate consumer demand.
10. Return on Equity: Comparing your net income to each unit of shareholder equity lets you understand whether or not your net income is appropriate for your business’ size. Not only does it inform you about profitability, but it also gives insight into how efficient you’re financially managing the business.
We can contact Fiinovation through their social media sites like Facebook, Twitter, Linkedin as they keep transparency about their work.
Following are the Links:
Fiinovation Delhi NGO address: 24/30, Ground Floor, Okhla Industrial Estate, Phase III New Delhi – 110020, Delhi, India
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