In this article:
After you've searched for your industry, you'll see benchmark data for key profit, cash, and productivity metrics, as well as quick and current ratios. This article offers a detailed description of each metric available, and you can also find this information within the LivePlan Benchmarks tab. Just click on any metric for details:
Profit metrics tell you how your margins compare to the rest of your industry. See how you stack up at three key points:
- After you pay your direct costs (gross margin)
- After you pay the rest of your regular expenses (operating margin)
- Your true bottom line (net profit margin)
|Profit metric||How it's calculated|
|Gross margin||This metric subtracts your direct costs from your revenue to determine your gross margin (sometimes called “gross income”) and then divides the result by your revenue to produce a percentage.|
|Operating margin||This metric subtracts all of your operating expenses (direct costs, payroll, rent, advertising, and so on) from your revenue to determine your operating income and then divides the result by your revenue to produce a percentage.
Note: If you manually enter your expenses in the Dashboard using the "Enter overall expenses" option, LivePlan will treat the value you enter there as your total operating expenses when it calculates operating margin. If you want to separate out taxes, interest, etc. from your operating expenses, be sure to use the "Enter individual expenses" option instead. (More Details)
|Net profit margin||This metric subtracts your total expenses from your revenue to determine your net profit (also known as “net income”) and then divides the result by your revenue to produce a percentage. (More Details)|
Startups and small businesses must manage their cash carefully. Even a profitable company can run out of money if it pays its bills too quickly and collects from its customers too slowly. The cash metrics show you how well you are protecting your cash position:
If the cash metrics aren't shown in your results, here are some tips for seeing them:
Enter values for the average days to get paid (Accounts Receivable or AR) and average days to pay (Accounts Payable or AP) in the Cash Flow Assumptions section of the forecast.
To see the Inventory on hand metric, enable inventory handling in the Cash Flow Assumptions section of the forecast.
|Cash metric||How it’s calculated|
|Average days to get paid||This metric divides your average accounts receivable balance (that is, the amount that your customers still owe you for past purchases) by your revenue in the selected period. The result is then multiplied by the length of the selected period to translate it into the equivalent number of days.|
|Average days to pay||This metric divides your average accounts payable balance (that is, the amount that you owe to your suppliers for purchases on credit) by your direct costs in the selected period. The result is then multiplied by the length of the selected period to translate it into days.|
|Inventory on hand||This metric divides the average value of your inventory by your direct costs for the selected period, then multiplies the result by the length of the selected period to translate that into days.|
Note: The spending metrics will be hidden if you have chosen "Enter overall expenses only" when you manually entered your actuals in the Dashboard.
|Spending metric||How it's calculated|
|Revenue spent on rent||This metric takes the expense(s) you designated as rent in the forecast, divides that total by your revenue, and expresses it as a percentage.|
|Revenue spent on marketing||This metric takes the expense(s) you specified as marketing in the forecast, divides that total by revenue, and then expresses it as a percentage.|
|Revenue spent on payroll||This metric takes the total of salaries & wages plus employee-related expenses, divides that total by revenue, and expresses it as a percentage.|
Note: There will not be values in the last two columns of the table, because LivePlan doesn't have access to the numbers necessary to calculate these values.
|Productivity metric||How it's calculated|
|Monthly revenue per employee||This metric takes the average monthly revenue and divides it by the average head count (that is, the number of full-time-equivalent employees and contract workers) for the selected period.|
|Monthly net profit per employee||This metric takes the average monthly net profit and divides it by the average head count (that is, the number of full-time-equivalent employees and contract workers) for the selected period.|
Quick and current ratios
Note: The Quick ratio isn’t shown if inventory isn’t enabled in the Cash Flow Assumptions area of the forecast.
|Other metric||How it's calculated|
|Quick ratio||This metric takes current assets and subtracts inventory from it, and then divides that total by current liabilities.|
|Current ratio||This metric takes current assets and divides that by current liabilities.|
What to do if no data is shown for a metric
There are a couple of reasons you may not see data for a particular metric in the Benchmarks overview. If you haven't started your forecast or entered your actuals in the Dashboard, you'll see messages like these, which tell you where to enter the missing information:
If you have started your forecast and/or entered your actuals into the Dashboard, and you see the phrase "No Data," it could be because you haven't entered data yet for the month you have selected in the Benchmarks display. Click the date menu in the upper right corner to change the display date:
Article is closed for comments.