The top KPIs for Treasury are essential as they provide measurable values that reflect the effectiveness and efficiency of an organization's financial health and liquidity management. By tracking KPIs such as cash conversion cycle, working capital ratio, debt-to-equity ratio, and interest coverage ratio, Treasurers can gain insights into the company's operational performance and its ability to meet short-term obligations and invest in growth opportunities.
These indicators help in forecasting cash flow, managing risks associated with currency and interest rates, and making informed decisions about financing and investment strategies.
This article showcases the Most Critical 12 KPIs for Treasury and Associated Benchmarks.
Cash Flow is a critical performance indicator that reflects the liquidity of an organization and its ability to meet short-term obligations.
It directly influences business outcomes such as operational efficiency, investment capacity, and financial health. A positive cash flow enables companies to reinvest in growth initiatives, pay down debt, and enhance shareholder value.
Conversely, negative cash flow can signal potential liquidity crises, impacting strategic alignment and long-term sustainability. Learn more about the Cash Flow KPI.
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We have 9 benchmarks for this KPI available in our database.
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Cash Balance is a critical performance indicator that reflects a company's liquidity and financial health.
It directly influences business outcomes such as operational efficiency, investment capacity, and risk management. Maintaining an optimal cash balance allows organizations to meet obligations, invest in growth opportunities, and navigate economic uncertainties.
Companies with strong cash positions can also enhance their creditworthiness, leading to favorable financing terms. Learn more about the Cash Balance KPI.
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We have 6 benchmarks for this KPI available in our database.
Free Cash Flow (FCF) is a crucial metric that measures a company's financial health by assessing the cash generated after accounting for capital expenditures.
It directly influences business outcomes such as investment capacity, dividend payments, and debt reduction. High FCF indicates strong operational efficiency and the ability to fund growth initiatives without external financing.
In contrast, low FCF can signal potential liquidity issues, limiting strategic alignment with long-term goals. Learn more about the Free Cash Flow (FCF) KPI.
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We have 5 benchmarks for this KPI available in our database.
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Working Capital is a critical financial metric that reflects a company's operational efficiency and short-term financial health.
It directly influences liquidity, cash flow management, and the ability to invest in growth opportunities. Effective management of working capital can lead to improved ROI metrics and enhanced strategic alignment with business objectives.
Companies that optimize this KPI often see better performance indicators, enabling them to respond swiftly to market changes. Learn more about the Working Capital KPI.
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We have 6 benchmarks for this KPI available in our database.
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Liquidity Coverage Ratio (LCR) serves as a critical measure of a financial institution's ability to withstand short-term liquidity disruptions.
It directly influences cash flow management, risk assessment, and overall financial health. A higher LCR indicates a robust capacity to meet obligations, while a lower ratio may signal potential liquidity issues.
Organizations leveraging LCR effectively can enhance operational efficiency and align their strategies with market demands. Learn more about the Liquidity Coverage Ratio (LCR) KPI.
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We have 8 benchmarks for this KPI available in our database.
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Current Ratio is a vital financial ratio that measures a company's ability to cover short-term liabilities with short-term assets.
It serves as a key performance indicator for assessing liquidity and financial health. A higher ratio indicates a stronger ability to meet obligations, which can enhance investor confidence and operational efficiency.
Conversely, a low ratio may signal potential cash flow issues, impacting strategic alignment and business outcomes. Learn more about the Current Ratio KPI.
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We have 5 benchmarks for this KPI available in our database.
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The Quick Ratio serves as a critical measure of a company's short-term liquidity and financial health.
It assesses the ability to meet short-term obligations without relying on inventory sales, making it essential for cash flow management. A higher Quick Ratio indicates stronger operational efficiency and a buffer against financial distress.
This KPI influences business outcomes such as creditworthiness, investment attractiveness, and overall risk management. Learn more about the Quick Ratio KPI.
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We have 2 benchmarks for this KPI available in our database.
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Debt Service Coverage Ratio (DSCR) is a critical financial ratio that measures a company's ability to service its debt obligations.
It directly influences cash flow management, operational efficiency, and overall financial health. A higher DSCR indicates a stronger capacity to meet debt payments, which can enhance creditworthiness and lower borrowing costs.
Conversely, a low DSCR may signal potential liquidity issues, prompting management to reassess financial strategies. Learn more about the Debt Service Coverage Ratio (DSCR) KPI.
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We have 4 benchmarks for this KPI available in our database.
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Debt-to-Equity Ratio is a crucial financial ratio that reflects a company's financial health by comparing its total liabilities to shareholders' equity.
This KPI influences business outcomes such as capital structure optimization and risk management. A higher ratio indicates greater reliance on debt, which can amplify returns but also increases financial risk.
Conversely, a lower ratio suggests a more conservative approach, potentially leading to lower returns but enhanced stability. Learn more about the Debt-to-Equity Ratio KPI.
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We have 2 benchmarks for this KPI available in our database.
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Interest Coverage Ratio (ICR) is a critical financial metric that measures a company's ability to meet its debt obligations.
It directly influences financial health, operational efficiency, and strategic alignment. A higher ratio indicates robust earnings relative to interest expenses, suggesting lower risk for stakeholders.
Conversely, a low ICR can signal potential liquidity issues, prompting management to reassess cost control metrics and debt strategies. Learn more about the Interest Coverage Ratio KPI.
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We have 5 benchmarks for this KPI available in our database.
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Net Debt to EBITDA Ratio is a critical financial ratio that gauges a company's ability to pay off its debt using its earnings before interest, taxes, depreciation, and amortization.
This KPI influences financial health, operational efficiency, and cost control metrics. A lower ratio indicates stronger financial stability, while a higher ratio may signal potential liquidity issues.
Companies with a favorable ratio can invest more in growth initiatives, enhancing their strategic alignment. Learn more about the Net Debt to EBITDA Ratio KPI.
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We have 4 benchmarks for this KPI available in our database.
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Cost of Capital is a critical financial metric that reflects the cost of obtaining funds to finance operations and growth.
It influences key business outcomes such as investment decisions, project viability, and overall financial health. Companies with a lower cost of capital can pursue more projects, enhancing operational efficiency and improving ROI metrics.
Conversely, a higher cost may limit strategic alignment and hinder growth initiatives. Learn more about the Cost of Capital KPI.
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We have 5 benchmarks for this KPI available in our database.
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These 12 Treasury KPIs were selected to provide a balanced view of liquidity, operational efficiency, and capital structure. They combine cash management metrics like Cash Flow and Cash Balance with solvency ratios such as Debt Service Coverage Ratio and Interest Coverage Ratio. This subset captures both short-term liquidity and long-term financial health, enabling comprehensive treasury oversight.
Monitor Free Cash Flow alongside Capital Expenditures to assess cash generation after investments. A declining Working Capital with a stable Current Ratio signals potential inventory or receivables issues. Track Liquidity Coverage Ratio in tandem with Cash Balance—divergence may indicate liquidity stress despite apparent cash reserves. Debt-to-Equity Ratio paired with Interest Coverage Ratio reveals leverage sustainability; rising debt with falling interest coverage warns of solvency risk.
Prioritize Cash Flow and Cash Balance first, as they are foundational, frequently updated, and directly reflect treasury’s immediate cash position. Add Free Cash Flow next to evaluate operational cash generation net of investments. Finally, incorporate Debt Service Coverage Ratio to assess debt repayment capacity. The full Treasury KPI set, with formulas and benchmarks, is available in the KPI Depot database.
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