Financial Key Figures: formulas, targets, and management report
The strategy must be reflected in the numbers. Here are the financial key figures Danish SMEs should steer by: the formulas, what each figure tells you, four groups to cover, and a template for management's one-pager.
Published · 8 min read
In short
- Eight key figures are enough — two in each of the four groups.
- Write down the formula, data source, and owner for each figure.
- Pair each financial figure with a leading indicator.
- Target levels are justified by industry data and concrete initiatives.
Why financial key figures belong in your strategy
Financial key figures translate the financial statements into a few numbers that management can steer by. They show whether the strategy is actually generating earnings, whether growth is financed, and whether the company can withstand a difficult period.
The trap is to report too many numbers. An SME needs six to eight key figures at the management level: two for earnings, two for efficiency, two for capital tied up and liquidity, and a couple for solvency. The rest belong in the departments' own reports.
Key figures are lagging indicators: they tell what has happened. Therefore, each financial key figure must be paired with at least one leading indicator — e.g., quote backlog, hit rate, or repurchase rate — so you can react before the number is known.
The most important key figures and how they are calculated
All formulas are based on numbers you already have in your annual report or accounting system.
| Key Figure | Formula | What it tells you |
|---|---|---|
| Gross profit / Gross margin | (Revenue − cost of goods sold) / revenue × 100 | Whether pricing and purchasing align. The most actionable figure for most SMEs. |
| Operating margin (EBIT margin) | Operating profit / revenue × 100 | How much is left of every krone after all operating expenses. |
| Return on Invested Capital (ROIC) | Operating profit after tax / invested capital × 100 | Whether the business generates a return on the capital owners and the bank have tied up in it. |
| Solvency ratio | Equity / total assets × 100 | Resilience. Below 20% often limits borrowing opportunities. |
| Current ratio | Current assets / short-term liabilities × 100 | The ability to pay bills over the next 12 months. |
| Working capital in days (CCC) | Debtor days + inventory days − creditor days | How long money is tied up. Often the quickest place to free up liquidity. |
| Revenue per employee | Revenue / number of full-time employees | Productivity and the effect of automation. |
| Customer concentration | Largest customer's revenue / total revenue × 100 | Risk. Over 25% should have a strategic goal attached to it. |
Four groups — choose two key figures in each
Cover all four groups. If a group is missing, you're flying blind in that specific area.
Earnings
Are we making money?
Gross margin and operating margin. Track them per business area, not just overall.
Examples: Gross margin service vs. project.
Efficiency
Are we using resources well?
Revenue per employee and capacity utilization or billing rate.
Examples: Billing rate of 72% vs. target of 78%.
Capital and liquidity
Do we have enough money?
Working capital in days and liquidity reserve in months of fixed costs.
Examples: Debtor days from 48 to 35.
Risk and robustness
Can we withstand a bad year?
Solvency ratio and customer concentration — the two figures the bank looks at first.
Examples: Solvency 28%, largest customer 34% of revenue.
How to build the key figure report in six steps
The goal is one page that can be read in five minutes at the management meeting.
1. Select a maximum of eight key figures
Two in each group. Everything else is moved to appendices or departmental reports, so the management meeting focuses on decisions.
2. Define definition and data source
Write down the formula and system for each figure. Disagreement on definitions is the most common reason for reporting to lose credibility.
3. Set baseline and target level
The baseline is the last 12 months. The target level comes from the strategy — and must be justifiable with concrete initiatives.
4. Find industry comparison
Use publicly available financial statements from the CVR (Central Business Register) for five comparable companies. This makes the target level realistic rather than arbitrary.
5. Pair each figure with a leading indicator
Gross margin is paired with price adjustment rate, liquidity with debtor days, growth with quote backlog. This allows you to react before the financial statements.
6. Fixed cadence and one owner per figure
Monthly reporting, quarterly discussion in the strategy review. Each figure has one owner who explains the deviation and proposes action.
Template: management's one-pager
Key Figure | Now | Target | Trend | Owner | Action ------------------------+-------+--------+-------+-------+---------------------------- Gross Margin | 31 % | 36 % | ↗ | CFO | Price adjustment Q1 Operating Margin | 6.2 % | 9.0 % | → | CEO | Reduce project overruns Revenue per employee | 1.4 M | 1.8 M | ↗ | COO | Automate order entry Debtor Days | 48 | 35 | ↘ | CFO | Dunning flow from day 3 Solvency Ratio | 28 % | 33 % | ↗ | CFO | Consolidate profit 2027 Customer Concentration | 34 % | <25 % | → | Sales | Two new segments
The “action” column is the most important — a key figure without action is statistics.
Common mistakes
- Twenty key figures at the management meeting, so none of them lead to a decision.
- Only aggregated figures, without breakdown per business area, where unprofitability hides.
- No definition for the figure, so two departments calculate it differently.
- Target levels set without industry comparison or without initiatives behind them.
- Exclusively lagging figures, so deviations are only discovered after quarter-end.
- No owner, so the deviation is noted every month without anyone taking action.
Frequently asked questions
Which financial key figures are most important for an SME?
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Gross margin and operating margin for earnings, revenue per employee for efficiency, working capital in days and current ratio for liquidity, and solvency ratio and customer concentration for risk. Six to eight figures are enough at the management level.
How is the gross margin calculated?
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Gross margin = (revenue − cost of goods sold) / revenue × 100. It shows how much of the revenue remains to cover fixed costs and quickly reveals problems in pricing or purchasing.
What is the difference between a financial key figure and a KPI?
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A financial key figure describes an economic result that has already occurred. A KPI can also be leading and behavior-oriented, e.g., hit rate or response time. A good report combines both, so deviations can be detected early.
How often should key figures be reported?
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Monthly to management and quarterly as a fixed agenda item in the strategy review. Liquidity figures can advantageously be tracked weekly during strained periods.
What is a good solvency level?
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It depends on the industry, but many Danish SMEs aim for 30-40%. Below approximately 20%, solvency typically limits access to loans and makes the company vulnerable to a single bad year.
Related guides
These guides are closely connected to financial key figures and are natural next steps in your strategy work.
- What is a KPI? Guide with examplesGood KPIs, baselines, target levels and data sources.
- Balanced scorecard explainedThe four perspectives and the path from strategy to measurable goals.
- Gap analysisFrom desired state and baseline to initiatives with owner and KPI.
- Strategy review: agenda and cadenceA fixed rhythm that keeps decisions and progress visible.
More strategy guides
Analysis and environment
Goals, KPIs and performance
Strategy process and planning
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