Financial KPIs Every CFO Should Track in 2025
clerissa • February 17, 2025
Financial KPIs Every CFO Should Track in 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:
Gross profit margin measures the profitability of core business operations, excluding indirect costs like administrative expenses.
While gross profit focuses on operational profitability, net profit margin considers all expenses, including taxes and interest.
The CCC measures how quickly a company can convert its investments in inventory and receivables into cash flow.
This KPI compares operating expenses to revenue, offering insights into cost management.
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.
ROE measures the efficiency of a company in generating profits from shareholders' investments.
EBITDA provides a clear picture of operational profitability without the influence of financing and accounting decisions.
As businesses invest in growth strategies, understanding the cost of acquiring new customers becomes crucial.
EVA measures the value a company generates beyond the required return of its shareholders.
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.
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.
Welcome to the FP&AI Podcast, where finance meets the future. In this episode, Roger is joined once again by Anthony and Donovan to dive into one of the most critical pillars of a successful finance function: planning. Stay tuned for the next episode, where the discussion moves to collaboration and business partnering in finance. Conversation Highlights: [0:00] Roger welcomes listeners back and recaps the previous episode on setting 3–5 year strategic objectives. He now moves on to the internal perspective of the balanced scorecard, asking: Which processes must finance excel at to satisfy stakeholders? [1:30] Roger notes that while Deloitte’s shareholder value framework lists hundreds of options, most internal objectives can be grouped into a few big themes: planning, quality, collaboration, speed, efficiency, innovation, and governance. [3:00] Anthony emphasizes the importance of planning, analysis, and reporting in finance. He highlights accuracy, timeliness, cost-effectiveness, and well-defined processes across cycles such as month-end, year-end, and budgeting. Clear roles, timelines, and responsibilities are critical for smooth execution. [6:00] They discuss practical planning rhythms. Processes should be reviewed at the start of cycles (e.g., January year-end planning), with regular team meetings—weekly or daily as needed—to monitor progress and address issues. Donovan adds that planning should start before year-end, often as early as mid-December. [9:00] The conversation shifts to dependencies on other departments during cycles like budgeting. Since other teams may not prioritize finance timelines, communication and early engagement are vital. Finance should build these requirements into processes and send reminders to ensure collaboration. [12:00] Roger stresses that budgeting must be framed as a business-wide responsibility , not just a finance deliverable. Departments should take ownership and accountability for their inputs, with finance facilitating and translating commitments into value. [16:00] Examples from IT planning illustrate how continuous engagement with business units avoids last-minute pressure. Finance should adopt similar practices, using ongoing communication and relationship management to integrate planning into everyday operations. [19:00] The concept of finance business partners is introduced. These roles embed in operations, bridging the gap between finance and other departments. They improve collaboration, ensure timely information flow, and enhance the quality of reporting—though organizations often fail to measure the ROI of these roles. [23:00] Roger returns to the importance of early communication and budget guidelines , which help divisions prepare and align. Effective planning should include communication checkpoints and reminders across cycles. [26:00] He adds that planning applies beyond finance—HR, IT, marketing, and all business processes should start with planning. Poor follow-through on insights can leave “money on the table,” highlighting the value of business partners in ensuring opportunities are realized. [28:00] As the podcast wraps up, Donovan stresses the quality and speed of planning , not just the act itself. Standardization and automation can improve efficiency. Anthony adds that planning must be continuous and iterative —even a bad plan provides useful feedback for replanning. [31:00] Roger closes by emphasizing that planning is central to finance and business success. Whether strategic or operational, good planning creates clarity, drives collaboration, and enables long-term value creation.
I’ve built an activity-based costing system. For my own group of companies. It works. The logic works. The reports work. The numbers run beautifully. Except for one thing. The data. The master data isn’t quite right. Not wrong. Just... inconsistent. So we start investigating. We doubt the results. We trace back through layers of transactions to find the flaw. Hours go by. Not because the tool is broken. Because the foundations were never right in the first place. And here’s the bigger problem. The real problem. Our trial balance and our financial statements? They don’t reflect the real business. At all. Even though we’ve done everything right. Dedicated finance team? Check. Excellent outsourced accountants? Check. Senior chartered accountants with carte blanche to "sort it all out"? Check, check, and check. We have clean audits. We're compliant. We tick every box. And yet... The insights we get? High-level. Irrelevant. They don’t help our managers. They don’t help our pricing. They don’t help us decide what to stop doing. Meanwhile, finance is pushing debits and credits into the general ledger at a furious pace. If they were paid per journal, they’d all be millionaires by now. And when those journals land? We look at the information. And it helps us squat. Nothing. No insights. Just questions. No answers. No decisions. Just a few more tasks to investigate what’s going on. Are the entries complete? Are they valid? Are they even useful to anyone outside of finance? Because here’s the truth most people won’t say out loud: Finance doesn’t understand the business. They process hundreds of journals efficiently. Fast. Neat. Organised. But the entries are wrong. Allocated to the wrong products. The wrong services. The wrong lines of business. Calculated on the wrong ratios. Based on assumptions that no one in operations would agree with. So when decisions are made? They’re based on fiction. Or worse - on “efficiently processed” fiction. And nobody sees it. Except business. They feel it. They just don’t have the time to audit finance’s work. Why should they? Isn’t that what we pay Finance to do? Because financial systems are built for someone else. For SARS. For the taxman. For the auditor. Not for the operator. Not for the person running the business. Not for the one asking, "Where are we actually making money?" And here’s the part that really gets me. We are master data junkies. We pride ourselves in clean, structured, standardised data. We obsess over naming conventions, hierarchies, mappings. So if we're struggling? What about the companies who don’t care? Who hire people who don’t care? Who don’t even know what master data means? What chance do they have? As a qualified accountant, I deeply want the financials to be right and adding value - all at the same time. I tell everyone I’m an accountant. I love playing for the winning team. Who doesn’t? I want our sweat to generate the numbers and tick all the boxes (I’m all for that). But at exactly the same time, I want them to add business value. Win/win. Finance and Business, joined at the hip. Partners. Winning together. Who wouldn’t want that? So we end up with financials that are easy to print. Easy to submit. Easy to tick off. But useless to run a business. What would it look like... ...if we rebuilt financial systems from scratch? Not for compliance. But for clarity? That’s what I’m working on. And it’s harder than it sounds. But it’s possible. And it’s necessary.
