23 Actual Financial Metrics from Successful Entrepreneurs

You’ve got the vision, the drive, and the determination, but are you working smart, with the right tools and focus?  Successful entrepreneurs don’t rely on passion alone, they rely on the numbers. They don’t just guess, they measure. For those just starting their financial journey, understanding some key terms is crucial, so we’ve put together a guide on 20 Common Accounting Terms for Freelancers to help you get started. Now, for those ready to dive deeper, we asked real business owners which financial metrics they track to stay profitable and sustainable. Here are 23 they recommend.  Explore the 23 Metrics Let’s dive into each metric, starting with: 1. Operating Margin When you want to see how well your core business is performing, look at the operating margin. It tells you the profit you’re making from your primary operations, before interest and taxes. This is indicator of how efficiently you’re running things. A healthy operating margin suggests your business is fundamentally strong and sustainable. Operating Margin = (Operating Income / Revenue) × 100%  2. Gross Profit Margin This metric measures the efficiency of your production or service delivery. It shows the percentage of revenue remaining after covering the direct costs of creating a product or providing a service. This helps you understand how well you’re managing those core costs. Higher margins generally indicate efficient operations.  Gross Profit Margin = (Revenue – Cost of Goods Sold) ÷ Revenue × 100%  3. Net Profit Margin The net profit margin represents the ‘bottom line’ of a business, indicating the percentage of revenue remaining after all expenses, including taxes and interest, have been paid. This metric provides a straightforward assessment of your business’s overall profitability and serves as a key measure of financial success.   Net Profit Margin = (Net Profit ÷ Revenue) × 100%  4. Current Ratio This ratio shows if you have enough liquid assets to cover your short-term liabilities, giving you a quick snapshot of your financial health. While a number above 1 means you can generally pay your immediate bills, a current ratio between 1.5 and 3 is often considered ideal, suggesting a healthy balance.  Current Ratio = Current Assets ÷ Current Liabilities  5. Average Revenue per Customer Knowing how much each customer spends on average is key for pricing strategies and understanding customer value. It helps you figure out how to maximize revenue from your existing customer base. This represents the average value each customer brings to your business.  Average Revenue per Customer = Total Revenue ÷ Total Number of Customers   6. Break-Even Point This is where your revenue and total costs meet. It’s the point where you’re neither making nor losing money. It’s crucial for setting sales targets and understanding how many units or services you need to sell to start turning a profit.  Break-even Point = Fixed Costs ÷ (Selling Price per Unit – Variable Cost per Unit)   7. Debt-to-Equity Ratio This ratio shows how much of your business is financed by debt compared to equity. It’s a key indicator of financial leverage. A lower ratio often signals a more stable financial structure, as it means you’re relying less on borrowed funds. Debt-to-Equity Ratio = Total Liabilities ÷ Total Shareholders’ Equity 8. Bounce Rate Bounce rate represents the percentage of visitors who land on your website and leave without clicking through to any other pages. For online businesses, it’s a key indicator of how well your landing pages are performing. A high bounce rate may suggest that visitors aren’t finding what they expected, or that the content isn’t engaging enough to prompt further exploration. This can be caused by slow load times, confusing layouts, irrelevant content, or a mismatch between your ads and what’s actually on the page. Reducing your bounce rate often starts with improving the first impression—through better design, clearer calls to action, and more targeted content.   Bounce Rate = (Single-page Visits ÷ Total Website Visits) × 100%    9. Customer Acquisition Cost (CAC) Want to know if your marketing dollars are working hard enough? This metric tells you exactly how much it costs to acquire a new customer. It’s vital for understanding the efficiency of your marketing and sales efforts, and keeping CAC in check ensures your customer acquisition strategy is sustainable and profitable.  CAC = Total Marketing and Sales Expenses ÷ Number of New Customers Acquired  10. Cash Flow Cash flow tracks the movement of money in and out of your business. It’s about having enough liquid cash to cover your expenses and invest in growth. Positive cash flow is essential for the day-to-day running of your business. Want to stay ahead? Find out more about cash flow projection here.  Cash Flow = Cash Inflows – Cash Outflows  11. Burn Rate Especially important for startups, this metric measures how quickly you’re spending your cash reserves. It helps you understand how long your runway is and plan accordingly. It’s a key tool for managing your finances in the early stages.  Burn Rate = (Starting Cash – Ending Cash) ÷ Number of Months 12. Net Working Capital Ratio This ratio looks at your short-term financial health. It compares your current assets to your current liabilities, giving you an idea of your ability to cover immediate obligations. It’s a quick check on your liquidity.  Net Working Capital Ratio = Current Assets ÷ Current Liabilities 13. Cash Conversion Cycle This metric measures how long it takes to convert your inventory and resources into cash from sales. A shorter cycle means you’re more efficient at turning your investments into cash, which is always a good thing.  Cash Conversion Cycle = Days Inventory Outstanding + Days Sales Outstanding – Days Payable Outstanding  14. Customer Lifetime Value (CLV) CLV is your guide to building relationships that truly pay off. It estimates the total revenue a customer will generate throughout their journey with you, making it clear why focusing on long-term relationships and retention is so important for your business’s bottom line.  CLV = Average Purchase Value × Purchase Frequency × Customer