These indicators also enable IR to benchmark progress against industry peers, which is crucial for demonstrating competitive advantage and justifying the company's market valuation. Moreover, KPIs aid in preemptively identifying areas of concern, allowing the company to address issues before they escalate, thereby maintaining investor confidence and potentially positively influencing stock prices.
KPI |
Definition
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Business Insights [?]
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Measurement Approach
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Standard Formula
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Analyst Coverage More Details |
The number of analysts who cover the company and issue reports on its performance. It is an important KPI for the investor relations team, as it helps to attract investor attention and coverage.
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Indicates market interest and institutionally perceived investment potential.
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Number of financial analysts following and analyzing a company’s financial performance.
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Not applicable (qualitative metric).
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- An increasing number of analysts covering the company may indicate growing interest and confidence in the company's performance.
- A decreasing number of analysts could signal declining interest or concerns about the company's prospects.
- What factors may be driving the change in analyst coverage?
- Are there specific areas or aspects of the company that analysts are particularly interested in or concerned about?
- Enhance transparency and communication with analysts to attract more coverage.
- Deliver consistent and reliable financial performance to maintain and increase analyst interest.
- Engage in proactive investor relations activities to attract new analysts and retain existing coverage.
Visualization Suggestions [?]
- Line charts showing the trend in analyst coverage over time.
- Comparison bar charts displaying the number of analysts covering the company versus industry peers.
- A decline in analyst coverage may lead to reduced visibility and interest from potential investors.
- Overreliance on a small number of analysts may result in limited perspectives and insights on the company's performance.
- Investor relations management software to track and manage analyst interactions and coverage.
- Financial data platforms to monitor and analyze analyst reports and recommendations.
- Integrate analyst coverage data with financial performance metrics to understand the impact of coverage on investor behavior.
- Link analyst coverage with marketing and branding efforts to align messaging and positioning in the market.
- Increased analyst coverage can lead to greater market visibility and potentially higher stock valuations.
- Conversely, a decrease in analyst coverage may impact the company's ability to attract new investors and raise capital.
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Asset Turnover Ratio More Details |
A measure of a company's ability to generate sales from its assets by comparing net sales with total assets.
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Reflects how efficiently a company uses its assets to generate sales.
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Net sales divided by average total assets.
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Net Sales / Average Total Assets
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- An increasing asset turnover ratio may indicate that the company is using its assets more efficiently to generate sales.
- A decreasing ratio could signal that the company is not effectively utilizing its assets to drive sales, potentially leading to lower profitability.
- What factors are contributing to the changes in our asset turnover ratio?
- How does our asset turnover ratio compare with industry benchmarks or with our historical performance?
- Optimize inventory management to reduce excess or obsolete assets that are not contributing to sales.
- Explore opportunities to increase sales without significantly increasing the total assets, such as through marketing strategies or product innovation.
- Regularly review and update asset utilization strategies to ensure that assets are being used efficiently to drive sales.
Visualization Suggestions [?]
- Line charts showing the trend of the asset turnover ratio over time.
- Comparison charts to visualize the asset turnover ratio of the company against industry peers or competitors.
- A consistently low asset turnover ratio may indicate inefficiencies in asset utilization, leading to reduced profitability.
- High asset turnover ratios may also pose risks if they are achieved through aggressive sales strategies that compromise long-term sustainability.
- Financial analysis software like Tableau or Power BI to track and analyze the asset turnover ratio.
- Enterprise resource planning (ERP) systems to integrate sales and asset data for more comprehensive analysis.
- Integrate the asset turnover ratio analysis with sales and marketing systems to understand the impact of different strategies on asset utilization and sales generation.
- Link the asset turnover ratio with supply chain management systems to ensure that assets are aligned with production and distribution needs.
- Improving the asset turnover ratio can lead to increased profitability and return on investment, but may also require strategic changes in asset management and sales strategies.
- Conversely, a declining asset turnover ratio can signal potential inefficiencies in asset utilization, impacting overall financial performance and investor confidence.
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Average Days to Sell Inventory More Details |
A calculation used to determine the average number of days it takes for a company to turn its inventory into sales.
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Measures inventory management efficiency and product demand.
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Average number of days taken to sell the entire inventory during a period.
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(365 days / Inventory Turnover Ratio)
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- An increasing average days to sell inventory may indicate slow sales or overstocking.
- A decreasing average days to sell inventory can signal improved demand or effective inventory management.
- Are there specific products that take significantly longer to sell?
- How does our average days to sell inventory compare with industry benchmarks or seasonal fluctuations?
- Regularly review and adjust inventory levels based on demand forecasts.
- Implement lean inventory management practices to reduce excess stock and improve turnover.
- Explore alternative sales channels or marketing strategies to boost product sales.
Visualization Suggestions [?]
- Line charts showing the trend of average days to sell inventory over time.
- Pareto charts to identify the most significant contributors to slow inventory turnover.
- High average days to sell inventory can tie up working capital and lead to obsolescence.
- Consistently low turnover rates may indicate poor product market fit or ineffective sales strategies.
- Inventory management systems like TradeGecko or inFlow Inventory for tracking and analyzing inventory turnover.
- Data analytics tools to identify patterns and correlations between sales performance and inventory turnover.
- Integrate average days to sell inventory with sales and marketing systems to align inventory levels with sales forecasts.
- Link with financial planning and analysis systems to understand the impact of inventory turnover on cash flow and working capital.
- Improving average days to sell inventory can free up working capital and reduce carrying costs, but may require initial investment in inventory optimization.
- Conversely, a high average days to sell inventory can lead to excess inventory write-offs and reduced profitability.
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CORE BENEFITS
- 47 KPIs under Investor Relations
- 15,468 total KPIs (and growing)
- 328 total KPI groups
- 75 industry-specific KPI groups
- 12 attributes per KPI
- Full access (no viewing limits or restrictions)
FlevyPro and Stream subscribers also receive access to the KPI Library. You can login to Flevy here.
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IMPORTANT: 17 days left until the annual price is increased from $99 to $149.
$99/year
Book Value per Share More Details |
The ratio of a company's book value to its total number of outstanding shares, signaling the value of a company's equity on a per-share basis.
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Assesses the company's net asset value on a per-share basis and can be compared to the share price.
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Total shareholder equity minus preferred equity, divided by the number of outstanding common shares.
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(Total Shareholder Equity - Preferred Equity) / Number of Outstanding Common Shares
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- Increasing book value per share over time may indicate improved financial health and profitability.
- Declining book value per share could signal potential financial distress or a decrease in the company's overall value.
- What factors contribute to the changes in book value per share?
- How does the book value per share compare to industry peers or benchmarks?
- Focus on increasing profitability and efficiently managing assets to improve book value per share.
- Regularly assess and adjust the company's capital structure to optimize the balance between debt and equity.
- Consider share buybacks or dividends to enhance shareholder value and potentially increase book value per share.
Visualization Suggestions [?]
- Line charts showing the trend of book value per share over time.
- Comparative bar charts displaying the book value per share of the company versus its competitors.
- Significant fluctuations in book value per share may lead to investor uncertainty and volatility in the stock price.
- A consistently declining book value per share could indicate fundamental issues within the company's financial management.
- Financial analysis software like Bloomberg Terminal or FactSet for in-depth analysis of book value per share and related financial metrics.
- Enterprise resource planning (ERP) systems to accurately track and manage the company's assets and liabilities.
- Integrate book value per share analysis with financial planning and budgeting processes to align strategic decisions with financial performance.
- Link book value per share with investor relations activities to effectively communicate the company's financial strength to shareholders and potential investors.
- Improving book value per share can enhance the company's ability to attract capital and pursue growth opportunities.
- Conversely, a declining book value per share may lead to decreased investor confidence and impact the company's ability to raise funds.
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Capital Expenditure (CAPEX) More Details |
The funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment, often related to the company's investment in its long-term future.
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Indicates the company’s investment in maintaining or expanding the scope of its operations.
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Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment.
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Total Expenditures on Physical Assets (as reported in financial statements)
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- Increasing CAPEX may indicate a company's commitment to expanding and modernizing its operations.
- Decreasing CAPEX could signal a period of consolidation or financial constraints.
- Are there specific areas or projects where CAPEX is consistently high or low?
- How does our CAPEX compare to industry averages or competitors' investment patterns?
- Regularly review and prioritize capital projects to ensure alignment with strategic goals.
- Consider alternative financing options or partnerships to fund large capital expenditures.
- Implement robust project evaluation and approval processes to maximize the return on investment.
Visualization Suggestions [?]
- Line charts showing CAPEX trends over time.
- Stacked bar charts comparing CAPEX allocation by project or department.
- Excessive CAPEX without corresponding revenue growth can strain financial resources and lead to increased debt.
- Insufficient CAPEX may result in outdated infrastructure or equipment, impacting competitiveness and operational efficiency.
- Financial modeling software to assess the impact of different CAPEX scenarios on cash flow and profitability.
- Enterprise resource planning (ERP) systems to track and manage capital expenditure budgets and actuals.
- Integrate CAPEX tracking with project management systems to ensure alignment with timelines and deliverables.
- Link CAPEX data with financial reporting systems to provide a comprehensive view of the company's investment activities.
- Increasing CAPEX may lead to improved productivity and competitiveness, but it could also impact short-term profitability due to higher expenses.
- Conversely, reducing CAPEX may free up resources in the short term, but it could hinder long-term growth and innovation.
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Cash Conversion Cycle (CCC) More Details |
A metric that expresses the time (in days) it takes for a company to convert resource inputs into cash flows, gauging the efficiency of a company's management in turning over inventory and collecting receivables.
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Measures how quickly a company can convert its investments in inventory into cash.
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Sum of days sales outstanding, days inventory outstanding, and days payable outstanding.
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Days Sales Outstanding + Days Inventory Outstanding - Days Payable Outstanding
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- An increasing CCC may indicate inefficiencies in inventory management or difficulties in collecting receivables.
- A decreasing CCC can signal improved working capital management and stronger cash flow generation.
- Are there specific areas in the cash conversion cycle where delays or bottlenecks frequently occur?
- How does our CCC compare with industry benchmarks or historical performance?
- Streamline accounts receivable processes to accelerate cash collection.
- Optimize inventory turnover by implementing just-in-time (JIT) inventory systems.
- Negotiate favorable payment terms with suppliers to extend the cash conversion cycle.
Visualization Suggestions [?]
- Line charts showing the trend of CCC over time.
- Stacked bar graphs comparing CCC components (DSO, DIO, DPO) to identify areas for improvement.
- A prolonged CCC can strain liquidity and working capital, impacting the ability to fund operations or growth initiatives.
- Shortening the CCC too aggressively may lead to stockouts or strained supplier relationships.
- Enterprise resource planning (ERP) systems with integrated financial modules for comprehensive cash flow analysis.
- Financial planning and analysis (FP&A) software for scenario modeling and forecasting the impact of CCC changes.
- Integrate CCC tracking with sales and operations planning (S&OP) processes to align production and inventory with demand forecasts.
- Link CCC with working capital management strategies to optimize cash flow and liquidity.
- Improving the CCC can enhance financial stability and reduce reliance on external financing, but may require initial investments in process improvements.
- Extending the CCC may provide short-term cash flow benefits but could strain supplier relationships and impact credit terms.
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In selecting the most appropriate Investor Relations KPIs from our KPI Library for your organizational situation, keep in mind the following guiding principles:
It is also important to remember that the only constant is change—strategies evolve, markets experience disruptions, and organizational environments also change over time. Thus, in an ever-evolving business landscape, what was relevant yesterday may not be today, and this principle applies directly to KPIs. We should follow these guiding principles to ensure our KPIs are maintained properly:
By systematically reviewing and adjusting our Investor Relations KPIs, we can ensure that your organization's decision-making is always supported by the most relevant and actionable data, keeping the organization agile and aligned with its evolving strategic objectives.