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Sales Profitability Dashboard

Roger Knocker • December 1, 2023

Sales Profitability Dashboard


Unprofitable business is the quickest way to kill your business which you will soon see on your bottom line. It’s therefore imperative to try and identify it quickly or look for opportunities exist to improve profitability is the sales before tampering with any other process.

For starters, this dashboards ensures that the % Gross Margin is healthy and within an acceptable range. This may however vary over time as the product mix and volumes change during the normal course of business.


Returns


The most damaging driver affecting profitability is product returns. In addition to reducing customer satisfaction levels, returns usually affect profit at their full cost and often represent a lost sale. They are almost always avoidable unlike other drivers such as price, which are determined largely by external forces such as competitor behaviour. This dashboard therefore tracks:


  • # of Returns
  • Value of Returns
  • % Returns to Overall Revenue


Order Profitability


Order profitability is great as it enables you to manage the profitability before the goods and services have been delivered. Depending on your contracts you still might be able to change an unprofitable order into a favourable one – but only if you can pick it up in time


This dashboard therefore has some key measures which must be visible (by order, customer, item etc. ) to help identify this:


  • Expected % Gross Margin
  • % Discount
  • Value of Discounts
  • % Actual Order Price to Last 3 Months Average Price


Item Profitability


When viewing item profitability it’s important that the Cost of Sales is accurately recorded in the underlying system.


Your costing model may be very simple (Moving Average) or very complex (Activity Based Costing) or somewhere in between (Standard Costing).


Whatever it is, make sure it’s up to date and that the rules are applied consistently. In many companies this process is not done very well, the ned results is that you don’t know that unprofitable products are being cross subsidised by profitable ones. Solving the problem is actual quite straightforward once you have the visibility and whatever action you take will make you more cash:


  • Stop Selling the unprofitable items
  • Ask the customer for a price increase
  • Sell the customers more generic products that they can afford that are more profitable for your business


The KPIs and measures used are the same as Order and Item profitability. The analysis is performed at the item or item grouping levels.


Customer Probability


Understanding Customer Profitability is probably the trickiest the profitability dashboards. In some businesses, customer probability is the same as Item profitability except that they data is aggregated by customer and not just item.


In your business you may need to track and allocate non item/service costs associated with the customer. For example:


  • Value of Rebates
  • Global Discounts
  • Delivery costs (if not costed into the item)
  • Cost of credit
  • Cost of Account and Relationship Management
  • Cost of complex customer processes that need to be complied with
  • Cost of excessive customer standards
  • Cost of Tenders


This section of the dashboard is where the sweet fruit grows. Let us help you harvest the allusive super profits.

By Clerissa Holm March 18, 2025
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Financial KPIs Every CFO Should Track in 2025
By Clerissa Holm February 17, 2025
In the ever-evolving financial landscape of 2025, CFOs are tasked with navigating complexities ranging from global economic shifts to technological advancements. The ability to track and analyse the right financial Key Performance Indicators (KPIs) is no longer a luxury but a necessity. These metrics not only provide insight into an organisation’s financial health but also support strategic decision-making. Here are the top financial KPIs every CFO should prioritise in 2025: 1. Revenue Growth Rate Revenue growth is a clear indicator of a company’s ability to generate sales over time. This KPI allows CFOs to evaluate the success of business strategies and identify trends in market demand. Formula: Revenue Growth Rate = [(Current Period Revenue - Previous Period Revenue) / Previous Period Revenue] x 100 Why It Matters: Monitoring revenue growth helps CFOs assess performance against strategic goals and anticipate future cash flow needs. 2. Gross Profit Margin Gross profit margin measures the profitability of core business operations, excluding indirect costs like administrative expenses. Formula: Gross Profit Margin = [(Revenue - Cost of Goods Sold) / Revenue] x 100 Why It Matters: It reveals the efficiency of production processes and pricing strategies, enabling CFOs to identify areas for improvement. 3. Net Profit Margin While gross profit focuses on operational profitability, net profit margin considers all expenses, including taxes and interest. Formula: Net Profit Margin = (Net Income / Revenue) x 100 Why It Matters: A high net profit margin indicates strong financial health and the ability to manage expenses effectively. 4. Cash Conversion Cycle (CCC) The CCC measures how quickly a company can convert its investments in inventory and receivables into cash flow. Formula: CCC = Days Inventory Outstanding + Days Sales Outstanding - Days Payables Outstanding Why It Matters: In 2025, with supply chain disruptions and rising interest rates, efficient cash flow management is critical. The CCC helps CFOs identify bottlenecks and optimise working capital. 5. Operating Expense Ratio (OER) This KPI compares operating expenses to revenue, offering insights into cost management. Formula: OER = (Operating Expenses / Revenue) x 100 Why It Matters: Keeping operating expenses in check is vital for maintaining profitability, especially in uncertain economic climates. 6. Debt-to-Equity Ratio This KPI highlights the financial leverage of the company by comparing total liabilities to shareholder equity. Formula: Debt-to-Equity Ratio = Total Liabilities / Shareholder Equity Why It Matters: With interest rates fluctuating in 2025, maintaining a healthy balance between debt and equity is crucial to avoid over-leveraging. 7. Return on Equity (ROE) ROE measures the efficiency of a company in generating profits from shareholders' investments. Formula: ROE = (Net Income / Shareholder Equity) x 100 Why It Matters: A strong ROE signals to investors that the company is effectively using their capital, which is vital for securing future funding. 8. Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) EBITDA provides a clear picture of operational profitability without the influence of financing and accounting decisions. F ormula: EBITDA = Net Income + Interest + Taxes + Depreciation + Amortisation Why It Matters: CFOs use EBITDA to benchmark performance against competitors and industry standards, making it a key metric for strategic planning. 9. Customer Acquisition Cost (CAC) As businesses invest in growth strategies, understanding the cost of acquiring new customers becomes crucial. Formula: CAC = Total Sales and Marketing Expenses / Number of New Customers Acquired Why It Matters: Tracking CAC helps CFOs ensure marketing spend aligns with long-term profitability goals. 10. Economic Value Added (EVA) EVA measures the value a company generates beyond the required return of its shareholders. Formula: EVA = Net Operating Profit After Taxes (NOPAT) - (Capital Employed x Cost of Capital) Why It Matters: EVA provides a holistic view of financial performance, emphasising value creation over short-term profits. Final Thoughts In 2025, CFOs must adopt a forward-thinking approach, leveraging advanced analytics and real-time reporting tools to stay ahead. By focusing on these essential financial KPIs, CFOs can drive strategic growth, ensure resilience, and foster long-term success in an increasingly competitive landscape. Tracking these metrics isn’t just about numbers; it’s about enabling informed decisions that align with the company’s vision and goals.
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