Key KPI Terms for Finance Personas in Mfg

Question 1

What is Gross Margin Percentage?

Answer 1

Represents the percentage of gross profit (revenue minus cost of goods sold) over total revenue. It helps assess the efficiency of manufacturing processes and pricing strategies.

Question 2

What is Inventory Turnover Ratio?

Answer 2

Measures how quickly inventory is sold and replaced within a specific time frame. A higher ratio indicates efficient inventory management.

Question 3

What is Accounts Receivable Days?

Answer 3

Calculates the average number of days it takes to collect outstanding accounts receivable, helping assess the effectiveness of credit and collections policies.

Question 4

What is Days Sales Outstanding (DSO)?

Answer 4

Measures the average number of days it takes to collect payments from customers. It’s a critical indicator of cash flow efficiency.

Question 5

What is Working Capital Ratio?

Answer 5

Indicates the balance between debt and equity in the company’s capital structure, providing insights into financial leverage and risk

Question 6

What is Return on Assets (ROA)?

Answer 6

Measures how efficiently the company utilizes its assets to generate profit. It’s a key indicator of operational efficiency

Question 7

What is Return on Equity (ROE)?

Answer 7

Assesses the company’s profitability in relation to shareholder equity, indicating how effectively it generates profits from shareholders’ investments.

Question 8

What is Capital Expenditure (CapEx) as a Percentage of Revenue?

Answer 8

Measures how much of the company’s revenue is invested in capital assets and expansion projects, helping assess growth strategies

Question 9

What is Earnings Before Interest and Taxes (EBIT)?

Answer 9

EBIT reflects the company’s profitability before interest and taxes are deducted. It provides insights into operational performance.

Question 10

What is Cash Flow from Operations?

Answer 10

Tracking the company’s cash flow from operational activities helps ensure sufficient liquidity for day-to-day operations.

Question 11

What is Budget Variance?

Answer 11

Compare actual financial performance to budgeted figures to identify discrepancies and make timely adjustments.

Question 12

What is Cost-to-Serve?

Answer 12

Analyze the cost of serving different customer segments or markets to optimize resource allocation and pricing strategies

Question 13

What is Variance Analysis on Material Costs?

Answer 13

Monitor and analyze variances in material costs to ensure cost control and efficient procurement.

Question 14

What is Direct Labor Costs per Unit?

Answer 14

Calculate the cost of direct labor per unit of production to assess labor efficiency.

Question 15

What is Waste and Scrap Percentage?

Answer 15

Measure the percentage of waste and scrap in the manufacturing process to identify areas for process optimization

Question 16

What is Production Downtime?

Answer 16

Monitor and minimize production downtime to maintain efficient operations.

Question 17

What are Safety Incidents?

Answer 17

Track and reduce the number of safety incidents in the manufacturing process, which can impact both cost and reputation.

Question 18

What is Quality Defect Rate?

Answer 18

Monitor and reduce the rate of defects in manufactured products, which can lead to cost savings and improved customer satisfaction

Question 19

What are Supplier Performance Metrics?

Answer 19

Assess key supplier metrics, such as on-time delivery, quality, and cost, to optimize the supply chain.

Question 20

What is Revenue by Product Line?

Answer 20

Analyze revenue generated by different product lines to focus efforts on high-performing products and identify areas for improvement