20 Essential Financial & Operational KPIs for Manufacturing Businesses

Performance tracking using metrics and KPIs can often be perplexing for many organizations. KPIs generally track longer-term company goals and are typically more financial or strategic in nature, such as increasing revenue by a certain percentage within a specified period.

Operational metrics, on the other hand, measure the progress of various actions implemented to achieve those goals over a shorter timeframe. These metrics are used across industries to monitor organizational processes, improve efficiency, and help businesses better understand and reflect on outcomes. For example, inventory turnover rate and cash-to-cash cycle time are operational metrics that directly impact an organization’s strategic financial results.

It is crucial that financial and operational metrics are directly connected to achieve a successful analysis process. This linkage allows for the identification of improvement opportunities and ensures that goals remain on target. For instance, if your strategic goal is to improve customer satisfaction and you are not meeting expectations, you can examine smaller operational metrics tied to the KPI to understand what’s affecting its performance.

In this article, we highlight 20 of the best financial and operational KPIs that can be used by most manufacturing businesses.


10 Popular Financial (Strategic) KPIs

Budget vs. Actual

Budget vs. actual compares a company’s actual sales or spending against budgeted amounts. This can help identify areas of overspending and where the business outperformed expectations.

Budget variance percentage = (Actual / Forecast – 1) x 100

Cash Runway/Burn Rate

Cash runway shows how long a company can operate before it runs out of cash, based on current available funds and monthly spending. Burn rate measures how much money a company spends over a certain period.

Monthly burn rate = Monthly expenses – Monthly revenue
Cash runway = Cash balance / Monthly burn rate

Days Payable Outstanding (DPO)

DPO is the average number of days it takes a company to pay its creditors and suppliers, indicating how well it manages cash flow.

DPO = (Average accounts payable / Cost of goods sold) x Number of accounting period days

Days Sales Outstanding (DSO)

DSO shows how long it takes, on average, for customers to pay for goods and services, with a lower DSO being preferable.

DSO = (Accounts receivable for a given period / Total credit sales) x Number of days in period

Gross Profit Margin

Gross profit margin measures the money left from product sales after subtracting the cost of goods sold (COGS).

Gross profit margin = ((Net sales – Cost of goods or services sold) / Net sales) x 100

Operating Cash Flow (OCF)

OCF is the cash generated from typical operations, providing insight into immediate spending capabilities.

Operating cash flow = Net income + Non-cash expenses – Increase in working capital

Operating Profit Margin

Operating profit margin shows the percentage of profit from operations before taxes and interest.

Operating profit margin = ((Gross profit – Operating expenses) / Revenue) x 100

Quick Ratio

The quick ratio measures if a business can fulfill short-term financial obligations by evaluating its assets.

Quick ratio = (Cash + Marketable securities + Accounts receivable) / Current liabilities

Return on Assets (ROA)

ROA measures profitability compared to total assets, indicating how efficiently a company uses its assets.

ROA = Net income / Average total assets

Working Capital Ratio

The working capital ratio measures liquidity, indicating if a business can meet its financial obligations.

Working capital ratio = Current assets / Current liabilities

Download Silvon’s KPI Guide – Drive Better Business Performance


10 Common Operational KPIs

Cash-to-Cash Cycle Time

This metric highlights the time between paying suppliers for materials and receiving payment from customers for the final product.

Cash-to-cash cycle time = Receivable days + Inventory days – Payable days

Cost Per Unit

Cost per unit is how much it costs to produce or buy a single unit of a product, helping to assess cost-effectiveness and pricing strategies.

Cost per unit = (Fixed costs + Variable costs) / Number of units produced

Gross Margin Return on Investment (GMROI)

GMROI measures the money made on a specific inventory investment, indicating inventory performance.

GMROI = (Gross profit / Average inventory cost) x 100

Inventory Turnover Rate

Inventory turnover rate shows how often inventory is sold and replaced over a period, indicating sales efficiency.

Inventory turnover rate = Cost of goods sold / Average inventory

Lead Time

Lead time measures the time between the start and end of a supply chain process, impacting inventory needs and customer satisfaction.

Cumulative lead time = Order process time + Production lead time + Delivery lead time

Lost Sales Ratio

Lost sales ratio indicates the number of days a product is out of stock compared to expected sales, highlighting the cost of stockouts.

Lost sales ratio = (Number of days product is out of stock / 365) x 100

On-Time Delivery Rate

On-time delivery rate measures the percentage of orders that arrive on or before the scheduled date, impacting customer satisfaction.

On-time delivery rate = ((Total orders – Late orders) / Total orders) x 100

On-Time Shipping Rate

The on-time shipping rate shows how often orders are shipped within the promised timeframe, assessing shipping efficiency.

On-time shipping rate = (Number of items shipped on time / Total items shipped) x 100

Perfect Order Rate

Perfect order rate measures the percentage of orders shipped without issues, reflecting operational efficiency and customer satisfaction.

Perfect order rate = [(Number of orders delivered on time / Total number of orders) x (Number of orders complete / Total number of orders) x (Number of orders damage-free / Total number of orders) x (Number of orders with accurate documentation / Total number of orders)] x 100

Sell-Through Rate

Sell-through rate compares the amount of inventory sold to the amount received from manufacturers, indicating sales efficiency.

Sell-through rate = (Number of units sold / Number of units received) x 100


While not exhaustive, this list should spark ideas for financial and operational KPIs you should be measuring. Silvon helps mid-market manufacturing and distribution companies accelerate growth through our suite of financial and operational planning, reporting, and analysis applications. See how we can help you execute your KPI strategy and performance management initiatives from the C-suite to the plant floor.

Learn More About Silvon

Download our Free KPI Guide To Stay Focused, Aligned & Accountable




Request a Stratum Demo

Silvon Software Inc. One Mid America Plaza, 3rd Floor, Oakbrook Terrace, IL 60181 • 800 874 5866 • Fax: 630 655 3377 info@silvon.com
Link to our Home page • Copyright ® 2024 Silvon Software Inc. • All rights reserved.Our Privacy Policy