These indicators help in forecasting cash flow, managing risks associated with currency and interest rates, and making informed decisions about financing and investment strategies. Moreover, KPIs allow for benchmarking against industry standards, enabling Treasurers to identify areas for improvement and to justify strategic financial decisions to stakeholders, thus aligning the Treasury's activities with the company's overall objectives.
KPI |
Definition
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Business Insights [?]
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Measurement Approach
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Standard Formula
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Available Cash Flow More Details |
Total cash that is available for the company to repay creditors or pay dividends and interests to investors after accounting for operational and capital expenditure needs.
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Assesses the company's ability to generate cash for debt payments, reinvestment, and returns to shareholders.
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Considers cash generated from operations minus capital expenditures and dividends paid.
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Net Income + Depreciation/Amortization - Changes in Working Capital - Capital Expenditures - Dividends Paid
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- Increasing available cash flow may indicate improved operational efficiency or successful capital investment.
- Decreasing cash flow could signal financial distress, reduced profitability, or excessive capital expenditures.
- What are the primary sources of available cash flow for the company?
- Are there specific areas of operational or capital expenditure that are impacting the available cash flow?
- Implement cost-saving measures to improve operational efficiency and increase available cash flow.
- Evaluate capital expenditure projects to ensure they align with the company's strategic goals and provide a positive return on investment.
- Explore opportunities to optimize working capital management to free up additional cash flow.
Visualization Suggestions [?]
- Line charts showing the trend of available cash flow over time.
- Stacked bar charts comparing the composition of available cash flow from different sources.
- Insufficient available cash flow may lead to missed debt payments, impacting the company's credit rating and financial stability.
- Excessive available cash flow without proper allocation may indicate underinvestment in growth opportunities or inefficient use of resources.
- Financial management software like QuickBooks or Xero to track and analyze available cash flow.
- Cash flow forecasting tools to project future cash flow based on different scenarios and assumptions.
- Integrate available cash flow analysis with budgeting and financial planning systems to align cash flow management with overall financial strategy.
- Link available cash flow tracking with treasury management systems to optimize liquidity and investment decisions.
- Increasing available cash flow can provide the company with more financial flexibility and resources for strategic initiatives and growth.
- Conversely, a decrease in available cash flow may limit the company's ability to invest in new projects or meet financial obligations.
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Average Daily Cash Balance More Details |
The average amount of cash a company has on hand over a specified period, showing how well the company manages its cash flow.
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Evaluates the company's liquidity and its ability to meet short-term obligations.
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Tracks the average amount of cash on hand each day during a reporting period.
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Sum of Daily Cash Balances / Number of Days in the Period
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- The average daily cash balance may show an increasing trend, indicating improved cash management or increased revenue.
- A decreasing trend could signal cash flow issues, increased expenses, or inefficient collection of receivables.
- Are there specific periods or events that consistently lead to higher or lower average daily cash balances?
- How does the average daily cash balance compare with industry benchmarks or seasonal fluctuations?
- Implement more efficient accounts receivable processes to accelerate cash collection.
- Optimize accounts payable management to better control cash outflows.
- Explore short-term investment options to generate returns on excess cash balances.
Visualization Suggestions [?]
- Line charts showing the trend of average daily cash balance over time.
- Stacked bar charts comparing average daily cash balance by month or quarter.
- Low average daily cash balance may lead to liquidity issues and an inability to meet financial obligations.
- High average daily cash balance may indicate underutilized funds and missed investment opportunities.
- Use cash flow forecasting software to project future cash balances and identify potential shortfalls.
- Implement electronic payment systems to streamline accounts payable and receivable processes.
- Integrate average daily cash balance tracking with financial planning and budgeting systems for more accurate forecasting.
- Link with banking and treasury management platforms to automate cash position reporting and analysis.
- Increasing the average daily cash balance may improve financial stability but could reduce available funds for investments or operational needs.
- Conversely, a decreasing average daily cash balance may indicate financial strain and impact the ability to pursue growth opportunities.
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Bank Facility Utilization Ratio More Details |
The extent to which a company is using the credit facilities available to it from banks and other financial institutions.
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Provides insight into the company's reliance on bank financing and its remaining borrowing capacity.
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Measures the amount of credit used versus the total credit available under bank credit facilities.
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Total Amount Drawn on Credit Facilities / Total Amount of Credit Facilities Available
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- An increasing bank facility utilization ratio may indicate a growing need for external financing or a shift towards more aggressive expansion strategies.
- A decreasing ratio could signal improved cash flow management, reduced reliance on debt, or a conservative approach to growth.
- What are the primary reasons for utilizing bank facilities, and are there opportunities to optimize internal cash flow instead?
- How does our bank facility utilization ratio compare with industry peers or similar companies in terms of size and sector?
- Regularly review and adjust credit policies to optimize the use of bank facilities without overreliance on debt.
- Explore alternative financing options such as equity financing or asset-based lending to diversify funding sources.
- Implement cash flow forecasting and working capital management strategies to reduce the need for external financing.
Visualization Suggestions [?]
- Line charts showing the trend of bank facility utilization ratio over time.
- Comparative bar charts displaying the company's ratio against industry benchmarks or peer group averages.
- High bank facility utilization ratios may increase financial risk and interest expenses, impacting overall profitability.
- Overreliance on debt financing can lead to liquidity issues and limit financial flexibility in the long run.
- Financial management software like QuickBooks or Xero for tracking and analyzing cash flow and debt levels.
- Enterprise resource planning (ERP) systems to integrate financial data and facilitate comprehensive financial analysis.
- Integrate bank facility utilization data with financial planning and analysis (FP&A) systems to align financing strategies with overall business goals.
- Link utilization ratios with budgeting and forecasting tools to ensure that funding needs are accurately projected and managed.
- Reducing the bank facility utilization ratio may improve the company's creditworthiness and reduce borrowing costs.
- However, a significant decrease in utilization may also indicate underutilization of available credit lines, potentially missing out on growth opportunities.
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CORE BENEFITS
- 44 KPIs under Treasury
- 15,468 total KPIs (and growing)
- 328 total KPI groups
- 75 industry-specific KPI groups
- 12 attributes per KPI
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IMPORTANT: 17 days left until the annual price is increased from $99 to $149.
$99/year
Capital Expenditure (CapEx) More Details |
The funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment.
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Indicates investment in maintaining or expanding the company's asset base.
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Records the company’s spend on acquiring, upgrading, and maintaining physical assets.
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Sum of all Capital Expenditure Payments during the Period
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- CapEx tends to increase during periods of expansion or growth initiatives.
- A decrease in CapEx could indicate a focus on cost-saving measures or a slowdown in business activities.
- Are there specific projects or departments driving the majority of the capital expenditure?
- How does our CapEx compare with industry benchmarks or competitors of similar size?
- Regularly review and prioritize capital projects based on their potential impact on revenue and operational efficiency.
- Implement cost control measures to ensure that capital expenditure aligns with strategic objectives and budget constraints.
- Consider alternative financing options such as leasing or partnerships to fund capital projects without significant upfront costs.
Visualization Suggestions [?]
- Line charts showing the trend of CapEx over time.
- Pie charts to illustrate the allocation of CapEx across different asset categories or business units.
- Excessive or unplanned CapEx can strain cash flow and financial resources.
- Insufficient CapEx may lead to outdated infrastructure or equipment, impacting productivity and competitiveness.
- Enterprise resource planning (ERP) systems to track and manage capital expenditure across the organization.
- Financial modeling and analysis software to evaluate the potential return on investment for capital projects.
- Integrate CapEx tracking with project management systems to ensure alignment with strategic goals and timelines.
- Link CapEx data with financial reporting and budgeting systems for accurate forecasting and resource allocation.
- Increasing CapEx may lead to improved operational efficiency and long-term revenue growth, but it can also impact short-term profitability.
- Reducing CapEx could free up resources for other investments or cost-saving initiatives, but it may also limit future growth opportunities.
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Capital Structure More Details |
The mix of a company's long-term debt, specific short-term debt, common equity, and preferred equity, which is used to finance its overall operations and growth.
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Illustrates the company's strategy for financing its operations and growth.
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Examines the mix of debt and equity financing a company uses.
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Total Debt / (Total Debt + Total Equity)
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- Increasing reliance on long-term debt may indicate a need for additional financing for expansion or investment.
- A shift towards more equity financing could signal a desire to reduce leverage and financial risk.
- What is the current debt-to-equity ratio and how does it compare to industry benchmarks or historical performance?
- Are there specific reasons for the current capital structure mix, such as tax advantages or risk management considerations?
- Regularly review and adjust the capital structure to align with the company's strategic goals and risk tolerance.
- Consider the cost of different financing options and the impact on the overall capital structure when making financing decisions.
Visualization Suggestions [?]
- Stacked bar charts showing the composition of the capital structure over time.
- Line graphs tracking the changes in each component of the capital structure (debt, equity) over time.
- Heavy reliance on short-term debt can lead to liquidity issues if not managed properly.
- Excessive use of debt financing may increase financial risk and interest expense, impacting profitability.
- Financial modeling software like Excel or specialized tools like Capital IQ for scenario analysis and capital structure optimization.
- Debt management platforms to track and manage different debt instruments and their associated costs.
- Integrate capital structure analysis with financial planning and budgeting processes to ensure alignment with overall financial goals.
- Link with risk management systems to assess the impact of the capital structure on the company's overall risk profile.
- Shifting towards more equity financing can dilute existing shareholders' ownership but reduce financial risk.
- Increasing debt levels may improve short-term liquidity but could lead to higher interest expenses and financial constraints in the long run.
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Cash Balance More Details |
The amount of cash that the company has on hand at any given time. A healthy cash balance is generally better, as it indicates that the treasury department is effectively managing the company's liquidity.
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Reflects the company's immediate liquidity position.
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Sums up the total amount of cash or cash equivalents held by the company at a given time.
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Total Cash and Cash Equivalents at a Point in Time
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- An increasing cash balance over time may indicate strong revenue generation and/or effective cost management, signaling financial health and operational efficiency.
- A decreasing or volatile cash balance could suggest operational challenges, inefficient cash management, or underperformance against financial objectives, necessitating further analysis.
- What are the primary drivers behind the current cash balance level, and how do they align with our strategic financial planning?
- How does our cash balance compare to industry benchmarks, and what can we learn from any discrepancies?
- Are there any upcoming expenditures or investments that could significantly impact our cash balance, and how are we preparing for them?
- Optimize cash flow management by closely monitoring receivables and payables to shorten cash conversion cycles.
- Establish a cash reserve policy to maintain an adequate cash buffer for unexpected expenses or investment opportunities.
- Regularly review and adjust investment strategies for surplus cash to ensure it is being used effectively, balancing liquidity with returns.
Visualization Suggestions [?]
- Line graphs showing the trend of cash balance over time, highlighting seasonal fluctuations or the impact of specific events.
- Stacked bar charts to compare the composition of cash sources and uses over different periods, providing insights into changes in cash flow activities.
- A consistently low cash balance could limit the company's ability to respond to opportunities or emergencies, potentially stunting growth or endangering operations.
- Excessively high cash balances might indicate inefficiency in capital allocation, as surplus funds could be better utilized to generate returns or invest in growth opportunities.
- Financial management software like QuickBooks or Xero for real-time tracking of cash flows and balances.
- Cash flow forecasting tools to project future cash positions and support strategic financial planning.
- Integrate cash balance tracking with budgeting and forecasting systems to enhance financial planning accuracy and operational decision-making.
- Link cash management with procurement and investment platforms to optimize spending and investment based on current and projected cash flows.
- Improving cash balance through better management can enhance financial stability, enabling more strategic investment and growth opportunities.
- Changes in cash balance, whether increases or decreases, can affect stakeholder confidence and may influence market perceptions and company valuation.
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In selecting the most appropriate Treasury 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 Treasury 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.