Which key figures provide information about the performance of a company?

A company’s performance can be evaluated using a variety of key figures that reflect different aspects of the company.

Take a look at the most important key figures that can be used to check a company’s performance:

Revenue Growth

How has the company’s revenue changed over a specific period – usually compared to the previous year? This key figure is one of the most important. Continuous growth usually signals increasing demand, successful sales strategies, or the opening up of new markets. It gives the company owner a direct indication of whether the business model is working and whether the company is developing in the desired direction. At the same time, strongly fluctuating or stagnating revenue growth can also indicate problems in sales, the market, or positioning. It is also important to look behind the figures: Where does the growth come from? Is it sustainable? And does it go hand in hand with healthy profit development? Because pure growth without profitability can be risky in the long term.

Profit Margins: Gross, Operating, and Net Margin

How efficiently does the company work? How much of the revenue actually remains as profit in the end? It is worth taking a look at three central margins here:

The gross margin indicates how much of the revenue remains after deducting the direct production costs (e.g. material or goods). It shows how profitable the core business is in principle.

The operating margin (also operating margin) goes one step further and also takes into account the ongoing operating costs such as personnel, rent, or administration. It, therefore, provides information on how economically the company works overall.

Finally, the net margin shows what actually remains as profit after deducting all costs – including taxes and interest. These key figures are particularly informative for company owners because they help to identify exactly where money is being earned or perhaps lost in the company. A decline in the margin can, for example, indicate rising costs or price pressure in the market – and is often an important early indicator of necessary measures.

EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization)

How much operating profit does a company generate without distorting the picture with accounting or financial special effects? This is particularly interesting for company owners because the EBITDA places a clear focus on the operative day-to-day business. It excludes costs that are relevant in accounting but have nothing to do with the actual performance of the company – such as high depreciation on assets or interest burdens from the past. This makes the EBITDA a popular key figure among investors or banks because it makes the economic substance of a company more comparable – regardless of the financing structure or tax effects. A stable or growing EBITDA signals that the core business is solid. Nevertheless, it should always be considered in the context of other figures such as cash flow or profit margin in order to get a complete picture.

Return on Investment (ROI)

How profitable are investments? The Return on Investment, or ROI for short, measures the economic success of an investment in relation to the resources used. In other words, the ROI shows how much profit was generated with a specific capital investment.

The formula for this is: ROI = (Profit / Investment costs) × 100

An ROI of 20% means, for example, that every euro invested generates 20 cents of profit. This key figure is particularly helpful for evaluating and comparing investments – for example, in machines, marketing, new employees, or locations. The ROI helps to make informed decisions: Which projects are really worthwhile? Where is capital flowing most efficiently? It is important not to consider the ROI in isolation: A high ROI is good, but the risk, the time horizon, and possible follow-up effects should also be taken into account. Some measures do not pay off directly in the form of short-term profit, but strengthen competitiveness, customer loyalty, or innovative strength in the long term. Nevertheless, the ROI remains a central instrument for the strategic management and prioritization of investments.

Cash flow

Looking at the actual cash flow shows how much money actually flows into the company – and how much flows out again. In contrast to purely accounting profits, the cash flow reflects the real solvency. Does the company remain liquid or is it dependent on external financing?

Above all, the operative cash flow, i.e. the flow of money from the ongoing business, shows how healthy the core business is. If this is permanently positive, it speaks for a solid company base. The investment cash flow shows how much money is being invested in new plants or projects, while the financing cash flow records changes through loans, deposits, or distributions. A good understanding of the cash flow helps entrepreneurs not only with planning but is also crucial in dealing with banks or investors – because in the end, it is not only what is on paper that counts, but what actually arrives in the account.

Liquidity Ratios

Can the company meet its short-term liabilities on time? How solvent is it really? Two important key figures here are the Current Ratio (also: liquidity ratio 3) and the Quick Ratio (liquidity ratio 1 or 2, depending on the calculation).

The Current Ratio relates the entire short-term available current assets (e.g. cash, bank, receivables, inventories) to the short-term liabilities. If this value is above 1, the company can theoretically cover its debts from the current assets – a good indicator of financial stability.

The Quick Ratio is stricter because it excludes the inventories – i.e. only the fastest available funds (e.g. cash and receivables) are taken into account. It shows whether there is enough liquidity even in the event of bottlenecks to meet ongoing obligations. These key figures are particularly important for entrepreneurs because they allow a realistic view of the financial flexibility of the company – regardless of profits on paper. A healthy liquidity can be vital, especially in difficult times.

Working Capital

It measures the scope for the daily operative business. It is determined by deducting the current assets (e.g. cash, bank, receivables, inventories) from the short-term liabilities (e.g. supplier invoices, short-term loans).

The formula is therefore: Working Capital = Current assets – short-term liabilities.

A positive value means that the company is able to cover its short-term payment obligations and also has funds available to act flexibly – e.g. in the event of unplanned expenses or seasonal fluctuations. A negative working capital, on the other hand, is a warning signal: It shows that ongoing obligations cannot be paid in full from the short-term available funds – which can lead to liquidity bottlenecks.

For you, the working capital is therefore an important key figure for managing the day-to-day business. It helps to find the balance between solvency and capital commitment – i.e. to have enough funds available without unnecessarily tying up money in inventories or receivables.

Operating Capital Cycle

This indicates how long it takes for the company to get back its invested capital through sales and incoming payments.

Leverage Ratio

How dependent is the company on borrowed capital? The leverage ratio shows the ratio of borrowed capital (i.e. debts such as loans or borrowings) to equity. This key figure provides information on how independently a company can act financially – or how dependent it is on external lenders. A high leverage ratio means that a large part of the financing is done through borrowed capital. This can make sense in the short term, for example for investments, but it also increases the risk – because interest and repayments must be serviced regardless of the business development. A low leverage ratio, on the other hand, speaks for stability and independence, as the company is financed from its own resources and there is less pressure from creditors. For company owners, the leverage ratio is an important indicator when assessing the financial health of their company – and often also a central criterion for lending by banks. The decisive factor is not only the amount of debt but also whether it is sustainable and well secured.

Equity Ratio

How solidly is the company financed? How high is the share of equity in the total financing?

The formula is: Equity ratio = (Equity / Total capital) × 100

A high value means: The company is financially independent, is more independent of borrowed capital and can also act more stably in economically difficult times. An equity ratio of, for example, 40% means that 40% of the assets are covered by own capital – the rest comes from external funds such as bank loans or supplier liabilities.

A solid equity cushion provides scope for action – for example for investments, crises, or strategic changes. At the same time, the capital should also be used efficiently, which is why the equity ratio should always be considered in connection with key figures such as return on equity or leverage ratio. Too much unused equity can offer security, but may reduce profitability.

Return on Equity (ROE)

What does my own money bring me in the company? How much profit was generated in relation to the equity used?

The formula is: ROE = (Net profit / Equity) × 100

An ROE of 15% means that every euro of equity has generated 15 cents of profit over the course of the year. This key figure shows how efficiently the capital is working – i.e. whether it is worth leaving the money in the company or possibly investing it differently.

A high ROE speaks for a strong earning power. At the same time, an above-average value can also be a sign of a very low equity ratio – that is, the company is heavily financed by external funds. Consider the ROE not in isolation, but always in conjunction with the leverage ratio and the equity ratio. This is the only way to get a realistic picture of the profitability – and the associated risk.

Market Share

How large is a company’s share of the total market volume within an industry or region?

The calculation is usually done as follows: Market share = (Revenue / Total revenue of the market) × 100.

A market share of 10% means that the company serves one tenth of the relevant market. An increasing market share can be a sign of successful products, convincing sales work, or a clear positioning. Conversely, a declining market share can indicate increasing competitive pressure or changing customer behavior. The market share is not only a measure of one’s own competitiveness, but also an important basis for strategic decisions – for example in expansion, pricing, or the development of new offers. However, it should always be considered in the context of the market dynamics: In a growing market, a constant market share can still mean increasing revenues, while in a shrinking market, even a stable market share can lead to declining revenues.

Customer Loyalty and Satisfaction

Even if they cannot be measured as easily in euros or dollars as revenue or profit, customer satisfaction and customer loyalty are among the most important indicators of corporate success. Satisfied customers not only come back – they recommend the company and thus ensure long-term, organic growth. The customer satisfaction can be measured via surveys, ratings, or the so-called Net Promoter Score (NPS) and provides information on how well products, service, and communication are received by the customer.

The customer loyalty shows how successful a company is in permanently retaining customers once they have been acquired – for example through recurring purchases, service contracts, or individual support. These key figures are important because they are directly related to the brand value, price stability, and sales success. A strong customer loyalty also lowers the sales costs, because it is much cheaper to retain existing customers than to acquire new ones. Those who regularly invest in customer relationships build up a decisive competitive advantage – especially in markets where products and prices are comparable.

Customer Acquisition Cost (CAC) and Lifetime Value (LTV)

These key figures are particularly important for SaaS companies and show the costs for acquiring new customers compared to the value that these customers generate over their lifetime.

The Customer Acquisition Cost (CAC) shows how much money a company has to invest to acquire a new customer. For this purpose, all relevant sales and marketing costs – e.g. advertising budget, salaries in sales, trade fair appearances, or tools – are divided by the number of customers acquired in a specific period:

CAC = Total acquisition costs / Number of new customers.

A low CAC is generally positive – it shows that customers are acquired efficiently. If the CAC increases without the quality or revenue per customer increasing, this may indicate problems in the customer approach or inefficient measures. CAC makes the sales success measurable and helps you to assess whether the investments in new customers are worthwhile.

The Customer Lifetime Value (LTV) indicates how much a customer brings to the company over the entire duration of the business relationship – i.e. not only with the first purchase, but over all repeat purchases and contracts. The calculation depends on the business model but typically takes into account the average revenue per customer, the average customer loyalty, and possibly also the margin.

LTV = Average revenue per customer × Duration of the customer relationship

The LTV shows how valuable a customer is for the company – and thus forms the perfect complement to the CAC. It becomes crucial when you relate both key figures: If the LTV is significantly higher than the CAC, the customer acquisition pays off. If it is the same or lower, the new customer acquisition becomes a loss-making business. The ideal is an LTV-CAC ratio of at least 3:1, i.e.: The customer brings in at least three times as much over his lifetime as he cost in the acquisition.

Key Figures on Employee Productivity

Which economic contribution does each employee make to the corporate success?

A common calculation is the revenue per employee or also the profit per employee: Employee productivity = Revenue (or profit) / Number of employees

This key figure shows you how efficiently your organization works – and whether the team is in a healthy relationship to the corporate performance. Especially with a growing workforce, it is important to check whether the economic performance is growing with it – or whether productivity losses are occurring. Low productivity can have many causes: unclear processes, unsuitable task allocation, lack of motivation, or outdated structures. Conversely, high productivity is not only a sign of good processes and committed employees – but also a competitive advantage. Measures to improve productivity include process optimization, digital support, clear goals and responsibilities, and investments in training and further education. The corporate culture also plays a role: Those who invest in a motivating environment not only increase productivity but also employee satisfaction – and thus ensure long-term success.

Innovative Strength

How future-proof is the company? How well does it react to new market requirements and develop further? Innovative strength is difficult to depict in a single key figure, but there are measurable indicators: e.g. the proportion of sales with new products, the frequency of product developments, R&D expenditure (research & development) or the number of patents filed. A high level of innovative strength is a strong signal for competitiveness, future viability and adaptability – especially in dynamic markets. Those who regularly invest in ideas, processes and new solutions not only secure market shares, but also relevance for tomorrow.

ESG Figures

ESG stands for Environmental, Social and Governance. ESG figures are becoming increasingly important, not only for large companies, but also for medium-sized companies. Examples include CO₂ emissions per product, the proportion of sustainable suppliers, diversity in management positions or compliance standards. These values show how responsibly a company operates – towards the environment, employees and society. This is not only a question of attitude, but increasingly also a competitive factor: customers, talent and investors are paying more and more attention to sustainable action. Those who become active early on secure long-term advantages and strengthen their own brand.

These key figures are not exhaustive, and the importance may vary depending on the industry and business model. The selection of relevant key figures depends on the goals and strategy of your company. A comprehensive analysis of these key figures can help you to better understand the performance of the company and to make strategic decisions.