Chapter 9: Financial Dashboard Decisions

How has my business been doing?

There are numerous ratios that companies can calculate to monitor their progress, including the following: (1) liquidity ratios, (2) solvency ratios, (3) activity ratios, and (4) profitability ratios.

Liquidity ratios include:

Solvency ratios include:

Activity ratios include:

Profitability ratios include:

This information can be extracted from the corporate financial statements, including the company's income statement and the balance sheet (aka, the Statement of Financial Position under International Accounting Standards).

Two considerations are essential to creating a useful dashboard:

The information interface – i.e., what the user sees – must be easy to understand (simplicity) and the metrics shown, the KPIs, must be important for making decisions (significance). The KPIs are developed to inform and guide executive action; they allow the business to continue operating successfully, while also making future expansion possible.