10 treasury indicators to improve your management

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What are treasury indicators? Treasury management indicators are metrics that allow us to know how an organization's treasury management is going. In order to draw up the correct treasury indicators for each company, it is key that we define the company's treasury objectives. In addition, the information collected must be reliable. For example, the use of software such as a collection system can help to have more precise measurements regarding cash flows, collection times, and liquidity management, among others.

What are the treasury indicators that we should take into account for buy uae database management? As we mentioned at the beginning, although these depend on each company, there are some common factors that can be considered; for example, the following 10:

What will you find in this text?

1. Liquidity ratio

2. Cash balance

3. Net cash flow

4. Financing cost

5. Average monthly balance

6. Working Capital

7. Accounts payable turnover ratio

8. Leverage ratio

9. Average Collection Period from clients

10. Cash conversion cycle ratio or CCC

1. Liquidity ratio
This indicator allows us to identify the liquidity that an organization has to meet its financial commitments (payments to suppliers, payroll payments, etc.) in the short term.

Two factors are taken into account when calculating a company's liquidity ratio :

a. Current assets , which involve the money the company has in cash and in its accounts; as well as accounts receivable and its inventory.

b. Current liabilities , which consider all of the company's payment commitments.

The liquidity ratio formula is:

Liquidity ratio = current assets / current liabilities

As for the interpretation of results, the ideal is that the result is at least 1. This is an indicator that the financial health of a company is positive and that it has a certain amount of liquidity. The higher the number obtained, the better the company's treasury will be in.

2. Cash balance
Although this treasury KPI is closely related to the previous one, it differs in the fact that it measures the cash a company has at a specific time. The treasury balance is also known by its acronym RT and unlike the previous one, it only considers the available assets of the business and even only those accounts receivable that are ready to be settled.