We can calculate any Finance & Accounting KPI values using Excel easily. In this article, I am sharing the top 10 accounting KPI calculations. These are…
Topics
💰 Net Profit Margin
Net Profit Margin = Net Profit / Sales
Positive profit margin indicates business is profitable while negative indicates the business is in loss.
📈 Revenue Growth
Revenue Growth = This year revenue / last year revenue – 1
Tells you how much revenue has grown compared to previous period. You can use the same logic to calculate COGS growth, profit growth too.
➗ Quick Ratio
Quick Ratio = (Total Current Assets – Inventory) / Total Current Liabilities
Tells you how strong the liquidity of a business is.
QR of 1 or more indicates the business is able to pay off its current debts using the cash or cash equivalents it has on hand.
QR under 1 indicates the business would struggle to pay off its current debts with what it has on hand.
📦 Inventory Turnover
Inventory Turnover = COGS / Average Inventory
Inventory turnover measures how quickly a business is able to offload the inventory.
The actual value of Inventory Turnover and how to interpret it changes from business to business. As a rule, a higher Inventory Turnover indicates more efficient inventory cycle.
📆 Days Inventory Outstanding
Days Inventory Outstanding = Average Inventory / Cost of Goods Sold x 365
DIO or Days Inventory Outstanding measures how much inventory a business is carrying. A lower number indicates well oiled manufacturing & inventory cycles while a higher number indicates sluggish demand or oversupply.
Please note that the typical values change from industry to industry and depend on other macro-economic factors.
For example, a vegetable business would have low DIO as the goods are naturally perishable, while a furniture business might have a high DIO as the goods do take long time to sell.
👥 Avg. Revenue Per User (ARPU)
ARPU = Total Revenues / Total Users
ARPU or Avg. Revenue per User reflects the amount of revenue generated per user. This is a useful measure in service business (especially software as a service or SAAS or web).
Net Present Value
NPV = NPV(rate, cash flows)
Net present value indicates the current (or present) values of a series of cashflows that occur in future. We can use the NPV function in Excel to calculate this if the cashflows are uniformly spaced.
NPV is an extremely useful calculation to understand the financial soundness of a business decision.
💸 Compound Interest
Compound Interest = Principal * (1+rate of interest) ^ number of years – Principal
Excel doesn’t have a compound interest function, but we can easily calculate the same using a simple formula.
📈 CAGR (Compounded Annual Growth Rate)
CAGR = RRI(duration, opening value, closing value)
CAGR measures the rate at which a business grew over a period of time. For example, if we say Apple grew at 10% CAGR since 2018 to 2023, it means, every year the sales of Apple went up by 10% compared to the previous year from 2018.
Excel doesn’t have a CAGR function but we can use the reverse IRR function – RRI to calculate the CAGR.
AAGR vs. CAGR:
AAGR or Average Annual Growth Rate simply measures the average of individual yearly growth rates (same as Revenue Growth we calculated in #2 above).
Consider adding AAGR (Average Annual Growth Rate) to your analysis as sometimes CAGR is hard to explain to others.
📉 Depreciation
Depreciation = the value of an asset lost during a period
Excel offers many functions to calculate depreciation of your assets or equipment. You can use below methods:
- Straight Line Method: This depreciates the asset value by the same amount every year until the end of its life. We can use SLN function for this.
- Declining Balance Method: This depreciates the asset value by same percentage every year. You can use DB function in Excel to calculate this.
- Double Declining Balance Method: This uses an accelerated DB method to depreciate assets faster in the initial years.
- Variable Depreciation Method: You can use a mix of either SLN or Declining methods depending on your needs using the VDB function in Excel.
📺 Top 10 Accounting KPIs - Video
Learn more about all these calculations using the video below. You can also see it on my channel here.
📄 Top 10 Accounting KPIs - Excel Workbook
Click here to download the sample file with all these calculations.
It has all the formulas & sample data for you to learn and practice.
🙋♂️ Need more?
Let me know the in the comments if you are looking for any additional Accounting / Finance KPI calculations. I will include them in this page as time permits.
24 Responses to “10 Supercool UI Improvements in Excel 2010”
The best improvement by far is the Collapse Ribbon ^ button !
Kind of a shame that some of the best improvements are actually returns to old functionality. One thing I don't like is that to get to recent files I need to do an extra click after File - apart from Save As, that's why I'm usually in the File menu. I like the sparkline options, though they are still as not fully featured as some of the free and pay options out there.
The collapse button for the ribbon menu is good news. Can you make the ribbon menus stick too?
Nine improvements, not ten. You can also select multiple objects in 2007. Click on the Find & Select item at the far right of the Home tab, and the dropdown looks remarkably like your 2010 screenshot.
@Jon.. Thank you. Dumb me, I somehow thought we couldnt select objects in Excel 2007. Just saw the "select menu" and it is there. I have corrected the post and removed the point. I have added the "you can make your own ribbons" instead. Thanks once again.
@Arti: what do you mean by make ribbons stick?
@Alex: May be it is my installation, but when I go to "File menu" I see "recent files" by default.
For example, if I am working with one of the contextual ribbon menus (Pivot tables, Drawing/Chart etc), as soon as I click away from the selected object, the menu tabs vanish. If I click on the object again immediately, then Excel will remember what I was looking at, but if I wander away and click on a Pivot, then back again on the Chart, the menus will 'appear' but not get activated, thereby causing much annoyance and additional clicking.
I want to "pin" the whole menu (not invididual commands) somehow, so that I can have the menu there for the length of the time I am working with graphics. Excel 2003 used to have the Drawing toolbar you could detach and hover while you were working, but this functionality disappeared in Excel 2007.
My thought was Excel should just allow a 'pin', similar to the Recently Opened files menu, for the Ribbon Menus as well. If I have not selected any Drawing object, the commands can be greyed out, but I want the menu as a whole to 'stick'.
@Arti... I think MS solved this problem differently. When I select a pivot and go to "design" tab Excel 2010 remembers this and automatically takes me to "design" tab when I reselect the pivot.
Apart from this you can also define your own ribbon with all the things you normally do. See the above article (I have added this after Jon's comments)
Nice feature. About time for a upgrade for MS Office
Oh... okay. That might be a start. I'd probably just copy-paste the Drawing tab haha. Thanks. I'll definitely give Excel 2010 a try.
Btw - have you considered getting into / gotten into the world of Excel as it meets SharePoint?
Actually, the replacement new thing is probably better than all the rest. One thing that the designers of the Office 2007 ignored was allowing regular users to customize their own interface. Office 2010's interface was expanded in this way to address the huge uproar.
Is there still a limit on how many things you can add to the QAT bar? (I'm too lazy to look myself.)
@Jeff.. it seems to take quite a few, but only shows one line and gives a little arrow button at the end. (summary: shucks!)
The best thing is you can edit the ribbon directly from excel, so now i can create my own bar with just the things I use regularly!
One of the annoying things in 07 for me is the Add-Ins menu bar - in 03 I could keystroke directly to menu add ins.. In 07 I needed an extra keystroke just to activate the add-in menu, then the keystrokes as normal.. Hope this marek sense..
John -
If you remember the old Excel 2003 Alt-key shortcuts, you can still use them in 2007. To get to the Add-In dialog:
Alt-T-I
Dear Arti & Chandoo
Seen your comments over some issues. Hope you are form India, gone through your comment expecting a pin to command it as a whole, great, hope if someone out of MS have read it, it may be kept in mind while the next R & D of Office Ver. 16
Just incase someone forgot CTRL+F1 will collapse the ribbon.
[...] was pleasantly surprised when I ran Microsoft Excel 2010 for first time. It felt smooth, fast, responsive and looked great on my [...]
I like the sparklines, and the ability to modify the charts
How do you get rid of the advertisment on the right hand side? If you upgrade then will it take off the ads?
Once again Microsoft has re-decorated the Office and we are NOT pleased!
The graphics object selector can be found in the Home ribbon under Find & Select, Select Objects near the bottom of the drop down. You can make it part of the Quick Access toolbar by right click over it and selecting Add to Quick Access toolbar.
The graphics "cursor" will now appear on the mini-toolbar at the top left of the window.
How to get rid of "Add-Ins" button in Backstage (File)" menu by means of XML code, i.e. to hide, to delete or to disable this button?
This button is usually situated in the Backstage menu between "Help" and "Options" buttons.
Vladimir, did you ever get an answer to your question?
I am tying to customize the ribbon UI for a file using XML, and this is precisely the piece I can't figure out. I can hide other tabs, remove items from QAT and backstage - all except the options that are showing up under add-ins in backstage. If there is an XML syntax for referencing this thing and making it invisible, I cannot find it.
Hey, nice tutorial. Please check my video tutorial on similar topic at the below link and provide your comments:
http://www.youtube.com/watch?v=TeIFc0jYjpA