Formulas Every CFO Should Know for Tracking Metrics

Use these formulas to calculate the metrics that matter most.

metrics formulas

Whether you’re a five-person startup or multi-billion-dollar enterprise, your finance function is the beating heart of your organization: it helps you invest profitably, determines where to channel your company’s efforts, how much money you can take off the table as profits, and helps you uncover any unforeseen challenges to your company’s health.

That’s where the position of the CFO comes in: as chief financial officer in 2024, it’s your responsibility to keep your hand on your company’s financial pulse, using a handful of metrics to measure relative health, advise of planned investments or initiatives, and identify challenges that might hinder your company’s profitability and growth.

Here is a quick recap of some of the most important metrics to track and the formulas to figure them out.

For more insight into these metrics, download our Metrics every CFO needs to know (and track) in 2024 guide.

Revenue Growth Rate

Revenue Growth Rate = (Final Value – Initial Value) / Initial Value

Total Revenue

Total Revenue = Number of Units Sold * Consumer’s Cost of Product/Service

Net Revenue

Net Revenue = Gross Revenue – Returns – Discounts – Sales Allowance

Revenue Per Customer

Revenue per customer = Total Revenue / Customer Count

Net Profit Margin

Net Profit Margin = (Revenue – Cost of goods sold – Operating expenses – Interest – Taxes) * 100 / Revenue

Gross Profit Margin

Gross Profit Margin = (Gross Profit * 100) / Total Revenue

Gross Margin (%)

Gross Margin (%) = Gross Profit / Revenue

Operating Profit Margin

Operating Profit Margin = (Revenue + Interest + Taxes) * 100 / Net Sales

Operating Margin (%)

Operating Margin (%) = EBIT / Revenue

Net Profit Margin

Net Profit Margin (%) = Net Income / Revenue

Contribution Margin

Contribution Margin = Price per Unit – Variable Cost per Unit

Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC) = (Cost of Sales + Cost of Marketing) / New Customers Acquired

Customer Lifetime Value (CLV)

Customer Lifetime Value (CLV) = Customer Value (CV) * Average Customer Lifespan (ACL)

Churn Rate

Churn Rate = (Lost Customers / Total Customers at the Start of Time Period) * 100

Average Revenue Per User (ARPU)

Average Revenue per User (ARPU) = Total Revenue / Total Number of Users

Average Revenue per User (ARPU) = Total Revenue During Set Time Period / Number of Active Users During Set Time Period

Return on Sales

Return on Sales = Operating Profit * 100 / Net Sales Revenue

Break-even Point (BEP)

Break-Even Point (BEP) = Fixed Costs / Contribution Margin

Price-Earnings Ratio

P/E Ratio = Market Share Price / Earnings per Share (EPS)

Earnings Per Share (EPS)

Earnings per Share (EPS) = (Net Income – Preferred Dividends) / Weighted Average Number of Shares Outstanding

Market Capitalization

Market Capitalization = Latest Closing Share Price * Total Diluted Shares Outstanding

Debt to Equity Ratio

Debt to Equity Ratio = Total Liabilities / Shareholders’ Equity

Cash Conversion Cycle (CCC)

Cash Conversion Cycle (CCC) = DIO + DSO – DPO

Days Inventory Outstanding (DIO) = (Inventory / Cost of Goods Sold) * 365
Days Sales Outstanding (DSO) = (Accounts Receivable / Net Credit Sales) * 365
Days Payable Outstanding (DPO) = (End of Period) Accounts Payable / (Cost of Goods Sold / 365)

Operating Cashflow Margin

Operating Cash Flow Margin = Operating Cash Flow / Operating Revenue * 100%

Operating Cashflow Ratio

Operating Cashflow Ratio = Cash From Operations / Current Liabilities

Cashflow Return on Investment (CFROI)

Cash Flow Return on Investment (CFROI) = Operating Cash Flow / (Total Assets – Total Current Liabilities)

Now that you’ve got the formulas, see how to use these metrics to make effective business decisions by downloading our Metrics every CFO needs to know (and track) in 2024 guide.

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