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Key Performance Indicators (Relationship Breakdown)

KPI Breakdown


1.     Interest Coverage

EBIT to Interest Expense

Affected by pretax income plus interest expense divided by interest expense


2.     Fixed Assets Turnover

Affected by total revenues divided by fixed assets (book value as entered into BS)


3.     Receivables (Conversion)

Affected by accounts receivable and total revenues


4.     Inventory Turnover

Affected by total revenues divided by inventory


5.     Return on Equity

Affected by pretax income and total equity - and total equity is equal to total assets minus total liabilities


6.     Debt-to-Equity

Affected by total liabilities divided by total equity - and total equity is equal to total assets minus total liabilities


7.     Cash-to-Debt

Affected by cash divided by total liabilities


8.     Income to Revenue (Pre-Tax)

Affected by pretax income divided by total revenues


9.     Cash Flow to Revenue

Affected by “discretionary earnings” divided by total revenues – and discretionary earnings are equal to the sum of pretax income plus owner compensation plus interest plus depreciation and amortization expense OR EBITDA plus owner compensation


10.  Receivables to Income (Pre-Tax)

Affected to total accounts receivable divided by pretax income


11.  Inventory to Income (Pretax)

Affected by total inventory divided by pretax income


12.  Fixed Assets to Income (Pretax)

Affected by total fixed assets (book value) divided by pretax profits


13.  Total Debt to Income (Pretax)

Affected by total liabilities divided by pretax income


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