Profit Margin

9 Financial KPIs and Metrics to Track for Your SME

As a small and medium-sized enterprise (SME) owner, you know how important it is to keep your business's finances in check. But how do you actually do that? One way is to monitor key performance indicators (KPIs) that give you a good picture of your business's financial performance. By regularly tracking your financial KPIs, you can make smart decisions for your business, spot areas that need improvement, and make sure your business is making a profit and can last long-term.

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How To Increase Profit Margins: A list of 6 Proven Strategies

Based on the 4th quarter data of 2021, 53% of the UK’s SMEs reported a profit in the previous 12 months. However, it’s one of the lowest results in the past decade. In this article, we discuss practical strategies to help you boost profitability, so stay tuned until the end. After all, profit margins measure how well a business is doing, so it’s critical to keep them in check.

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Profit margin?

Profit margin refers to the percentage of revenue that a company or organization retains as profit after accounting for all of its costs and expenses. It is a measure of how much money a business is earning relative to its overall sales revenue.

The profit margin is calculated by dividing the company's net income (i.e., revenue minus all costs and expenses) by its total revenue, and then multiplying by 100 to express the result as a percentage. The formula for calculating profit margin is as follows:

Profit Margin = (Net Income / Total Revenue) x 100

For example, if a company has $1 million in revenue and $500,000 in net income, its profit margin would be 50%:

Profit Margin = ($500,000 / $1,000,000) x 100 = 50%

A higher profit margin indicates that a company is more efficient at converting its sales revenue into profit. Profit margin is an important financial metric for evaluating the profitability and financial health of a business, and is commonly used by investors, analysts, and lenders to assess a company's performance and potential for growth.

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9 Financial KPIs and Metrics to Track for Your SME

How To Increase Profit Margins: A list of 6 Proven Strategies

Profit margin?

FINANCIAL CONTROL / MANAGEMENT PLANS

Outsourced Finance Department

From £1,000 P / M

Remote Financial Controller

From £700 P / M

Virtual Bookkeeping Partner

FROM £450 ONWARDS

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