Which key figures are important for young companies in terms of financial management?
For young companies, also known as startups, financial indicators are particularly important to assess the financial health, performance and potential for future growth of the company. The following key figures are particularly relevant in the initial phase of a company:
Liquidity ratios
- Level 1 liquidity (cash liquidity) *: Shows the extent to which short-term liabilities are covered by cash and cash equivalents.
- Second-degree liquidity (quick ratio) *: Refers to the coverage of short-term liabilities with cash and short-term receivables.
- Grade 3 liquidity (current ratio) *: Shows the extent to which current assets cover current liabilities.
Profitability figures
- Equity profitability*: Shows how profitable the equity invested is.
- Total capital profitability*: Indicates the profitability of all capital invested in the company.
Growth indicators
- Sales growth*: Shows how fast the company is growing. Particularly important for investors.
- Customer growth*: For many start-ups, particularly in the B2C sector, customer growth is a key metric.
Cost indicators
- Burn Rate*: Shows how quickly a company uses up its capital before it makes a profit or needs additional capital.
- Runway*: Shows how many more months the company can operate with the current financial resources before new capital is needed.
Debt ratios
- Debt ratio*: Shows the ratio of debt to equity.
- Debt Service Coverage Ratio (DSCR) *: Indicates the extent to which interest and repayments on borrowed capital can be paid from cash flow.
Other relevant key figures
- Customer Acquisition Costs (CAC) *: Shows how expensive it is to acquire a new customer.
- Customer Lifetime Value (CLTV or LTV) *: Estimates the total value of a customer over the entire duration of their relationship with the company.
- Churn rate*: Shows the percentage of customers that are lost in a given period of time.
It is important for young companies to regularly monitor these and any other key figures and, if necessary, make adjustments to the business strategy (provided that the start-up knows its own strategy). It is also essential to consider the context and specific circumstances of the company when interpreting these figures.
With Money Key, in addition to the many existing key figures, you can set up your own key figures for the affected startup/SME.
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