The Holistic Accountant
A holistic accountant goes beyond tax returns, aiming to offer proactive advice to maximise clients' wealth after all taxes. Stuart Wemyss and Mena Abraham explore multifaceted considerations weekly, highlighting the need for a holistic approach. Each episode is succinct and to the point with no fluff or sales pitches. For further details, check out www.prosolution.com.au.
The Holistic Accountant
Key financial ratios to measure the health of your business
In this episode, Mena and Stuart discuss several financial ratios that you can use to monitor the health of your business, including:
There’s no point having a good accounting system if it doesn’t give you useful and actionable information to help you improve your business. Ratios allow you to quickly assess what areas need your attention.
- Profitability: gross margin, net (EBIT) margin (inc. salary for you), revenue per employee, earnings & revenue growth, return on assets
- Cash flow: Average creditor/debtor days (debtor days should be < creditor days), Cash Conversion Cycle, cash interest coverage ratio
- Assets: working capital ratio, stock turnover ratio, ROI
- Industry/business specific: whatever is your key success factor e.g., profitability ratios by service line and/or product category, etc.
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IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.
