Category: Finance & KPIs

Current Ratio: What It Actually Tells You About Liquidity A current ratio of 2.1 looks safe. It means you have €2.10 in current assets for every €1 in current liabilities. At a €30M manufacturer, that might feel like plenty of cushion. But strip out €3.2M of inventory that hasn’t moved in six months, and you’re…

Days Inventory Outstanding (DIO): Formula, Benchmarks, and Qlik Expressions A manufacturer running a 60-day DIO against a 40-day industry average isn’t just “holding extra stock.” It’s financing €822,000 in trapped working capital on behalf of inventory that hasn’t sold yet. That number comes from a real calculation: €15M COGS, a 20-day gap above benchmark, and…

Operating Margin: Formula, Benchmarks, and What It Reveals About Core Business Health A distribution business does €30M in revenue with a 3.8% operating margin. Industry benchmark for mid-market distribution is 5%. That 1.2 percentage point gap is €360,000 per year that the business is leaving on the table – not in some hypothetical optimized future,…

EBITDA Margin: Formula, Benchmarks, and What It Says About Your Business Value Two manufacturers. Both doing €25M in revenue. Both showing a net profit margin of 4%. At a 6x EBITDA multiple – standard for mid-market manufacturing – one is worth €27M and the other is worth €13.5M. Same revenue. Same net profit. Twice the…

Gross Margin: Formula, Benchmarks by Industry, and What It Actually Measures A distributor running 28% gross margin in an industry where the benchmark is 34% isn’t underperforming on execution. It’s carrying a €1.8M annual structural disadvantage on €30M revenue – built into the cost of every unit it sells, before a single overhead dollar gets…

Cash Conversion Cycle (CCC): Formula, Benchmarks, and What Your Working Capital Is Actually Costing You A manufacturer with €30M in revenue and a 65-day CCC is running 20 days above the industry average. That gap is €1.64M in trapped cash – cash the business earned, cash it needs, cash sitting in receivables and inventory while…

Days Sales Outstanding (DSO): Formula, Benchmarks, and What It’s Actually Costing You A €50M company running 13 days above its industry average DSO doesn’t have a receivables problem. It has a €1.78M working capital loan – that it extended to its customers, for free, and is probably paying interest on. That’s not a metaphor. Cash…