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Supporting the CFO – Metrics Every Financial Executive Needs to See

The CFO is highly dependent on their team. Because of this, we have provided some of the most important metrics that need to be available to help support key finance decisions.

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The CFO is highly dependent on their team. Because of this, we have provided some of the most important metrics that need to be available to help support key finance decisions.

As finance’s leader and final decision maker, the CFO is highly dependent on their team to provide the timely and accurate data and metrics to support these key decisions.

Our research shows that these are some of the most important metrics that need to be available at any time, for any reason to support key finance decisions:

Working Capital

Companies need working capital in order to make big moves. CFOs can’t wait until month-end reporting to decide whether they have enough capital available to act boldly.

Operating Cash Flow

Companies can’t meet their most basic obligations without operating cash flow. The CFO needs to be aware of how much cash is currently in the bank at all times.

Payroll Headcount

Labor costs can quickly become unmanageable if the CFO does not know exactly how many people are on the payroll. The figure in front of the CFO should be constantly updated to reflect hirings, firings, retirements etc.

Current Ratio

The current ratio of assets vs liabilities indicates whether a company is at risk of insolvency. CFOs must track this metric carefully to prevent accounting from veering off track.

Return on Equity

Shareholders in publicly-traded companies demand to know how their investment is being spent. Return on equity indicates this, so it’s important for CFOs to monitor the metric carefully leading up to shareholder’s meetings.

Accounts Payable Turnover

How quickly a company turns over accounts reveals how nimble its operations are. CFOs need to be aware when operations are speeding up, and, more importantly, when they are slowing down.

Accounts Receivable Turnover

Companies that are slow to collect debts run into cash flow problems and often have to borrow money. Monitoring accounts receivable turnover is a way for CFOs to forecast looming financial issues in advance.

Debt to Equity

Debt can be an asset or an obstacle. Debt to equity indicates if and when a company is being constrained by its debts, conditions every CFO needs to be aware of.

Inventory Turnover

Revenue is the lifeblood of a company, and inventory turnover verifies that revenue estimates are accurate. CFOs can check to see that rising revenues correlate with rising sales.

Deciding what metrics to follow is the easy part. Collecting and analyzing the constituent information is the hard part. If the accounting department does not have the staff or resources to supply it, the CFO has to act blindly, placing their company at risk.

blumshapiro offers a number of solutions, from advanced financial management software to outsourced accounting services. Put your CFO in a position of strength and certainty by contacting our team.

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