To assess financial health and long-term growth potential, businesses need to rely on corporate financial analysis indicators instead of just looking at the profit report. These indicators reflect the ability to pay, operating efficiency, risk level and profitability. The article below summarizes the most important financial analysis indicators , meaning, calculation and practical application in modern business management.
What is financial analysis? The role of financial analysis indicators in business
Financial analysis is the process of collecting, standardizing and evaluating financial data to measure the financial health of a business. This is the basis for evaluating capital efficiency, risk level, growth potential and stability in operations.
Here is an overview of the role of corporate financial analysis indicators:
1. Measuring operational efficiency
Financial ratios show how a business is using its resources: are assets generating enough revenue, are inventory turnover fast, are operating costs reasonable?
2. Support forecasting and planning
Financial indicators are important inputs for budgeting and forecasting models. Businesses can simulate multiple scenarios to prepare for market risks.
3. Risk analysis
Leverage ratios, interest coverage ratios, and liquidity ratios provide early warning of cash flow risks – factors that can cause a business to become insolvent.
4. Transparency with investors
Investors are interested in ROE, ROA, profit margin, P/E indexes to evaluate profitability and business value.
5. Foundation for financial performance management
In EPM (Enterprise Performance Management) systems, including solutions such as Sactona – EPM solutions Exclusively distributed by Bizzi , financial indicators are input data to build strategic dashboards, KPIs and summary reports.
5 groups of financial analysis indicators that businesses need to know
Here are the 5 most important groups of indicators that every business should monitor periodically. These are also the groups of indicators that Vietnamese CFOs are using in financial management reports, as well as in international EPM systems.
1. Liquidity Ratios
These ratios measure a company's ability to pay short-term debt – vital to operations.
Key indicators include:
• Current ratio (Current solvency)
Recipe:
Current ratio = Current assets / Current liabilities
→ Assess whether the business has enough short-term assets to pay short-term debts.
• Quick ratio (Quick payment ability)
Recipe:
Quick ratio = (Current assets – Inventory) / Current liabilities
→ Measures higher liquidity when excluding inventories.
• Cash ratio
Recipe:
Cash ratio = Cash & equivalents / Current liabilities
👉 Meaning of index group:
Businesses with strong liquidity will be more stable when the market fluctuates.
2. Profitability Ratios
This is a group of indicators that determine whether a business is creating value, profit and capital efficiency.
Key metrics:
• Gross profit margin
= (Gross profit / Revenue) × 100%
• Net profit margin
= (Net income / Revenue) × 100%
• ROA (Return on Assets)
= Net income / Total assets
• ROE (Return on Equity)
= Net income / Shareholder's equity
• ROI (Return on Investment)
= (Return on investment – Investment cost) / Investment cost
👉 Meaning:
This group of indicators shows whether the business is making good profits or not, whether the owner's capital is being used effectively or not.
3. Efficiency Ratios
Measures the rate of use and turnover of assets, inventories, and liabilities.
Key metrics:
• Inventory turnover
= Cost of goods sold / Average inventory
• DSO – Days Sales Outstanding (Average number of days to collect payment)
Speed measurement debt collection.
• DPO – Days Payable Outstanding
Measures supplier credit utilization.
• Asset turnover
= Revenue / Total assets
👉 Meaning:
This group of metrics helps CFOs optimize working capital and detect operational bottlenecks.
4. Leverage Ratios
This group of indicators indicates the level of debt risk and capital structure of the enterprise.
Key metrics:
• Debt-to-equity ratio
= Total liabilities / Shareholder's equity
• Debt ratio
= Total liabilities / Total assets
• Interest coverage ratio
= EBIT / Interest expense
👉 Meaning:
Too high leverage ➝ increases financial risk; but reasonable leverage ➝ increases profitability.
5. Valuation Ratios
For businesses raising capital, IPOing or being evaluated by investors.
Key metrics:
• EPS (Earnings Per Share)
= Net income / Number of outstanding shares
• P/E Ratio
= Market price per share / EPS
• P/B Ratio
= Market price per share / Book value per share
👉 Meaning:
Investors use this group of indexes to value a company.
Instructions on how to read and understand financial analysis indicators
Once the data is available, CFOs and FP&A need to perform analysis at three levels:
1. Comparison over time (trend analysis)
- Compare YoY, QoQ to identify trends.
- For example: DSO increases continuously → bad debt risk increases.
2. Compare with industry average
- A trading business will have a different inventory turnover than a manufacturing business.
- The debt ratio of the logistics industry is higher than that of the F&B industry.
3. Evaluation according to strategic objectives
- If the company prioritizes expanding market share, profit margins may be lower.
- If cash flow is a priority, DSO and DPO need to be optimized.
Bizzi's digital solutions in the future to help automate the collection - synchronization - standardization of financial data, combined with Sactona to create in-depth analytical dashboards according to FP&A standards.
Application of financial analysis indexes in business management
Financial analysis metrics are not just numbers on a report, but strategic navigation compass for CFOs, CEOs, and the entire finance department. When applied properly, they help businesses predict risk, optimize operations, control cash flow, and improve overall organizational performance. Here's how these metrics work in practice — in more detail, with examples and case studies.
1. Evaluate the operational efficiency of each department
Financial ratios such as asset turnover, profit margin, DSO/DPO are not only for the accounting department but also reflect the performance of other departments:
• Sales department
- DSO (Days Sales Outstanding) shows collection speed → DSO increased from 45 to 75 days = Because the sales team sells quickly but collects slowly, the risk of bad debt is high.
• Production department
- Inventory turnover → Slow turnover = large inventory → increased storage costs → affects cash flow.
• Purchasing department
- DPO (Days Payable Outstanding) → Low DPO = business pays too quickly, does not take advantage of supplier credit.
• Senior management
- ROA / ROE shows the efficiency of using assets and equity → ROE increases but ROA decreases = businesses increase debt to increase profits.
⚡ Meaning:
CFOs and CEOs can use these metrics to evaluate departmental performance, build departmental KPIs, and identify areas for improvement.
2. Early warning of cash flow and liquidity risks
Corporate financial metrics are especially important for identifying risks before they become crises.
Risk signals:
• Current ratio < 1 → Not enough short-term assets to pay debts → risk of insolvency.
• Cash ratio decreased for many consecutive periods → Cash flow is tight, even though revenue has not decreased.
• Abnormal increase in DSO → Customers pay late, poor debt collection.
• Debt ratio exceeds 60–70% → High leverage risk, especially for construction and real estate businesses.
• Gross profit margin decreased sharply → Cost of goods sold increases, competitiveness decreases.
⚠️ These signals help CFOs make timely decisions:
- Adjust credit limit
- Optimizing working capital turnover
- Review of pricing and cost policies
3. Support budgeting and forecasting
When business budgeting and financial forecasting, Financial indicators are the foundational data.
Application examples in planning:
• Revenue forecast → based on Asset Turnover or number of active SKUs
If asset turnover is increasing → the business can adjust the revenue target higher.
• Cost forecasting
- Gross margin decreases → production cost forecast increases
- Number of days of inventory increases → storage costs increase
• Cashflow Forecast
- High DSO → delayed cash flow
- Low DPO → cash flow is pulled to the bottom
Applications in scenario simulation (what-if analysis):
- If raw material prices increase by 15% → how will the gross profit margin change?
- If DSO increases from 50 → 70 days → how much cash flow does the business lack?
Sactona – EPM solution distributed by Bizzi Helps businesses simulate financial scenarios in just minutes (according to the driver-based planning model), helping CFOs make quick and data-driven decisions.
4. Optimize cash flow and working capital
The Efficiency & Liquidity index group plays a very important role in working capital management.
How CFOs apply these metrics:
• Improve cash flow
- Reduce DSO → collect money faster → increase real cash flow
- Apply early payment discount policy
• Optimize cash flow
- Increase DPO appropriately → take advantage of supplier credit
- Adjust payment schedule to suit cash flow
• Reduce excess inventory
- Optimize Inventory Turnover
- Demand Forecasting Policy Application
Real life example – FMCG business in Vietnam
- Inventory turnover from 3.2 cycles/year → 6.5 cycles/year
→ Reduce inventory 40%
→ Free up cash flow of more than 20 billion VND
5. Foundation for Financial Performance Management (EPM) System
Today, EPM solutions such as Sactona Allows businesses to integrate all financial metrics into the model:
- Real-time KPI Dashboard
- Consolidation report
- Budgeting – Forecasting – Scenario Planning
- Track company-wide performance by unit
Why are financial metrics important to EPM?
Because EPM not only shows past data, but:
- Simulating future strategies
- Connect KPI → budget → execution performance
- Helping CFOs move from reactive to proactive
6. Support strategic decision making at CEO & CFO level
When businesses consider strategy:
- Expanding the market
- Factory investment
- New product development
- Financial restructuring
- IPO / M&A
Financial indicators are the foundation:
• Expansion strategy
- High ROA → good asset utilization
- High asset turnover → the business is operating efficiently
- Stable gross margin → can open more branches
• Investment strategy / M&A
- High ROE → attractive company
- Low debt ratio → room for borrowing
- Good EBITDA margin → ability to generate stable cash flow
• Cost cutting strategy
- Net margin is lower than industry average → need to optimize costs
- DSO increase → tighten debt
- Low inventory turnover → eliminate underperforming SKUs
When should businesses apply EPM to analyze financial indicators?
Analyzing business financial indicators becomes more difficult when data is scattered across many different systems such as accounting, ERP, CRM, POS or banking data. If businesses continue to rely on Excel, the synthesis and analysis will take a long time, be prone to errors and cannot create a complete financial picture. This is the time for businesses to consider applying EPM to standardize and automate analysis.
1. As the number of financial indicators increases
As the business grows, the number and complexity of corporate financial analysis indicators significant increase, including:
- Liquidity indicators
- Profitability indicators
- Performance indicators
- Financial leverage ratios
- Valuation metrics
Excel is only suitable when the number of indicators is small. When a business needs to analyze dozens to hundreds of indicators over time, by product, by branch, by department, etc., Excel can no longer meet the depth and speed.
EPM application helps:
- Automatically aggregates indexes in real time
- Eliminate manual errors in calculations
- Multi-period, multi-dimensional, and multi-unit analysis
- Automatic warning when index exceeds threshold
2. When data is distributed, there is no single source of truth.
Many Vietnamese businesses face the following situation:
- Each part holds a piece of data.
- Format inconsistency
- No data consolidation system
This makes calculating financial ratios time consuming and prone to error.
EPM helps:
- Create a unified data source
- Consolidate data from ERP, accounting, CRM, POS
- Ensure metrics are calculated from accurate data
3. When CFOs need real-time visibility into financial performance
Fast-growing businesses can't wait for month-end reports. CFOs need to see:
- DSO increase or decrease?
- Is inventory turnover slowing down?
- Gross margin fluctuates according to which product?
- Is cash flow tight on a weekly or quarterly basis?
EPM, especially Sactona – Japanese EPM solution exclusively distributed by Bizzi , allow:
- View dashboard in real time
- Drill-down from the overview index to each transaction
- Monitor automatic alerts
- Quick analysis according to FP&A model
4. When the business has an FP&A team or revenue target of 200 billion or more
The larger the business, the more indicators it needs and the higher the analysis requirements. When revenue exceeds 200 billion:
- Departmental budgeting becomes mandatory
- Forecasts must be updated quarterly or monthly.
- Consolidated reporting across multiple branches is more complex
- Need to measure performance, costs, and profits per unit
EPM becomes the central tool for the FP&A team to:
- Budgeting
- Forecasting
- Consolidation
- Performance analytics
5. The value that Sactona – EPM solution distributed by Bizzi – brings
Sactona is suitable for Vietnamese businesses thanks to:
- Excel-like interface – easy to learn, easy to apply
- Fast deployment in just 2–3 months
- IT independent
- Much lower cost than Oracle EPM or SAP SAC
Sactona helps businesses:
Automated financial ratio analysis
No more manual data entry, the system automatically calculates all ratios such as ROE, ROA, DSO, DPO, Debt Ratio… in real time.
Dynamic dashboard and deep drill-down capabilities
CFOs can go from the big picture down to:
- Each branch
- Each cost center
- Each specific invoice or transaction
Fast deployment, suitable for Vietnamese businesses
- No programming required
- Can be operated by finance team
- Suitable for parent company - subsidiary model
Frequently asked questions about financial analysis indicators
1. What are the most important financial ratios?
ROE, ROA, gross profit margin, DSO, DPO, Debt ratio are the 5 most important groups of indexes to evaluate profitability - risk - operational efficiency.
2. How to calculate financial indicators?
It depends on the index, but most of them are based on data: revenue, expenses, profits, total assets, equity, liabilities. You can start with a standardized Excel file.
3. What metrics should small businesses track?
Cash flow, profit margin, debt turnover and debt ratio are the most important.
4. Is there any software that helps to track the index automatically?
You can combine ERP/accounting with an EPM solution like Sactona for deeper analytics.
5. Is EPM suitable for medium-sized enterprises?
Yes, especially when the business is growing rapidly, has many branches or needs accurate forecasting.
Conclusion: Track financial analytics metrics effectively with solutions from Bizzi
Analyzing financial metrics isn’t just a requirement for internal controls or investor reporting — it’s the core foundation that helps businesses operate on data, anticipate risks early, and make informed decisions. However, for metrics to be truly valuable, businesses need a system that helps them data consolidation – calculation automation – performance visualization instead of just relying on Excel manually.
That is the reason why many businesses in Vietnam choose Bizzi solutions , include:
- Cost management solution – cost & invoice data , helps input data accurately right from the transaction generation step.
- Sactona – Japanese EPM solution exclusively distributed by Bizzi , helping businesses manage budgets, forecast and analyze financial performance on a single platform.
👉 Contact Bizzi for advice on suitable solutions:
- EPM Implementation Roadmap by Data Maturity Level
- Demo Sactona according to your business model
- Checklist of important financial indicators to monitor
- Consulting on optimizing financial analysis and FP&A processes
