The Big Picture and KPIs

Follow this video to understand and utilize The Big Picture widget (KPIs) on the main page of CFO Scoreboard:


Each section of the report contains one or more “key performance indicators”, or KPIs. KPIs are critical measurements or metrics that help you understand how your business is performing.

Each KPI is shown on its own tab. Within each tab, CFO Scoreboard will show you the value of this specific KPI for the current time period…. the percentage increase or decrease in this KPI over the previous time period…. and a helpful thumbs-up or thumbs down to tell you whether the KPI is moving in the right direction. The thumb’s up or thumb’s down is always a comparison between two points in time. You might be comparing this month to last month, or this year to date vs. last year to date.

The body of the KPI tab contains a graph which plots this KPI over time. Analyzing a KPI over time (which is called “Trend Analysis”) is the best way to understand how the business is doing. Unfortunately most business owners never look at their financials or analyze their numbers this way, so they lack optics. Looking at the current month’s financial results in isolation is not nearly as helpful as understanding the trend over time and being able to compare previous time periods to the current time period’s results.

Imagine two businesses which each have $100,000 of profits in a given month. In that particular month, the companies look identical. But let’s say that company A’s profits last month was $90,000, and the month before that was $80,000, and the month before that it was $70,000. The profit has been increasing each month by $10,000. The trend is positive, and this company is growing. Now let’s say that company B’s profits last month were $110,000 and the month before that were $120,000 and the month before that were $130,000. Company B's profits are decreasing by $10,000 each month, and at this rate they will be losing money or out of business in 10 months. Analyzing trends is the only way to see whether you are getting batter or getting worse.

This is why we put so much focus into showing trends and analyzing how your business is changing over time. And that’s the purpose of the graphs we have included for each KPI in CFO Scoreboard.

Each graph is interactive. Hover over the graph and you will see more information about each data point on the graph.  This is a great way to quickly see the value of the KPI in a previous month.

To the right of the graph is a toggle allowing you to display the KPI in one of three modes. The monthly trend shows the actual value of the KPI for each month. The short-term trend is the sum of the KPI’s value over the previous three months. This is called a trailing three-month total. The long-term trend is the sum of the KPI over the previous 12 months. This is known as the trailing 12 month total.

The short term and long term graphs remove the volatility that frequently occurs in a business’ monthly financial statements. Taking out the volatility helps business owners compare apples to apples and get a true understanding of their business’ performance.

For example, imagine a retail business. Most of their annual sales occur during the holiday season. In October, November, and December, it may appear that sales are growing rapidly and the company is doing very well. But when January rolls around, sales fall off a cliff and it appears that the company is on the brink of disaster. In a seasonal business like this, comparing one month to the next is not very helpful.

A seasonal business will get a lot of value from the long term trend. When you view the long-term trend in CFO Scoreboard, each data point on the graph represents the sum of the previous 12 months. The data point for March shows the sum of the 12 months ending in March. And the data point for April shows the sum of the 12 months ending in April. So each month, the long term trend adds the current month and removes the same month in the previous year. 

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