5 Critical Financial Metrics to Monitor in a Small-Medium Business

October 21, 2024

For business owners aiming for growth and stability, keeping track of critical financial metrics is a good basis for deciding strategy.

Here are five essential financial metrics that are of value to most leaders. They can, of course, be supplemented by other metrics which are especially suited to your business.

1. Revenue Growth Rate

This is the most straightforward indicator of business health. Tracking monthly, quarterly, and yearly revenue growth demonstrates market demand, and is a basis for future planning.

For example, a software-as-a-service (SaaS) company tracked the revenue growth rate over the past three years. In the first year, revenue grew by 20% due to the launch of a new product feature. In the second year, revenue growth accelerated to 35% as the company expanded into new markets. However, in the third year, revenue growth slowed to 10% as competition intensified.

By closely monitoring these trends, the company was able to adjust its strategies, focus on customer retention, and develop new products, ensuring sustained growth and market relevance.

2. Profit Margins 

It is not just about how much money is coming in, but how much is retained as profit. Understanding gross, operating, and net profit margins can pinpoint where costs can be trimmed, or prices adjusted.

For example, a retail chain increased its gross profit margins by 5% through strategic pricing adjustments and inventory management. This improvement led to a 20% increase in net profit, allowing the company to reinvest in store renovations and customer experience enhancements.

3. Cash Flow

A business can be profitable on paper but still struggles if cash is not available when needed. Monitoring cash flow ensures there is enough liquidity to cover operational expenses and invest in growth.

For example, a small business improved cash flow by 25% by renegotiating payment terms with suppliers and implementing tighter expense controls. This increased liquidity enabled the business to hire a marketing professional to pursue growth opportunities and expand its market presence.

4. Debt-to-Equity Ratio

This metric provides insight into financial stability. A high ratio might indicate over-reliance on borrowing, while a low ratio suggests a strong equity position.

For example, a manufacturing company reduced its debt-to-equity ratio from 1.2 to 0.8 by refinancing high-interest debt and using excess cash to pay down liabilities. The improved financial flexibility allowed the company to pursue acquisitions and invest in new technologies.

5. Return on Investment (ROI)

ROI measures the profitability of an investment relative to its cost. Calculating ROI for different aspects of the business (e.g. marketing campaigns, equipment purchases, etc.) can help assess the effectiveness of investments and make informed decisions about future investments.

For example, a software company achieved a 300% ROI on its digital marketing campaign by targeting high-value customer segments and optimising ad spending. This resulted in a significant increase in sales and brand awareness, driving long-term customer loyalty and revenue growth.

Keeping these metrics in check can provide invaluable insights into the financial health and growth trajectory of a business. Regularly monitoring and analysing these figures paves the way for informed decisions and a robust financial strategy.

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Inherited assets & CGT: what to know before you sell

By Karen Grainger • May 5, 2026
It’s common to inherit land, shares or other investments and assume there won’t be any tax to think about. While inheriting an asset usually doesn’t trigger capital gains tax (CGT) straight away, CGT can become an issue later—particularly when you decide to sell. What affects the CGT outcome? · When the deceased originally acquired the asset (especially whether it was before or after 20 September 1985 ). · What the asset is (a home, an investment property, farmland, shares, a business asset, etc.). · Whether it was ever used to produce income (for example, rented out) or used in a business. · Who owned it and how (for example, owned jointly, or inherited through multiple generations). Questions we commonly ask (because the answers can change the result): · When did the deceased buy the asset? (And was it inherited from an earlier estate?) · Was the asset originally purchased with someone else (for example, a spouse or sibling)? · Was the asset used in a business (and could any small business CGT concessions apply)? As a general rule, there’s usually no CGT event when you inherit an asset . However, if you sell the inherited asset later, CGT may apply—and the calculation often depends on when the deceased acquired the asset and how it was used . If the inherited asset is a home: the main residence exemption may still apply after the owner’s death, but it can depend on things like when the deceased moved out, whether the property was rented, and who lived in the property after death. Cost base (the starting point for CGT): for many inherited assets, your cost base will depend on whether the deceased acquired the asset before or after 20 September 1985 . In broad terms, if the asset was owned by the deceased before that date, the cost base is often the market value at the date of death . If it was acquired after that date, the cost base is generally carried over based on the deceased’s position (with adjustments in some cases). Where the asset is connected to a business, small business CGT concessions may be relevant. If you’re thinking about selling something you inherited, it’s worth getting advice early—before contracts are signed—so we can confirm what records you’ll need and what the CGT position is likely to be.

Possible changes to Capital Gains Tax

By Matt Richardson • April 30, 2026
It is Federal Budget night on May 12 and even though you may not be an excited accountant or tax agent counting down the days, if you are an investor, it is likely there will be changes announced which will impact you. The change which is likely to be unveiled will be the Albanese Government’s approach to capital gains tax, targeting mainly share and property investors, but will also impact business owners who sell business assets. It is likely the Albanese Government will re-introduce an inflation indexation model for calculating capital gains tax. This proposed change has gained more traction in the media over the last few weeks. Currently, individual taxpayers and trust beneficiaries are able to reduce their capital gains tax on the sale of any capital investment by 50 per cent, providing this investment has been owned for at least 12 months. Please note – superannuation funds receive only a one-third discount. For an individual, this means half the gain is tax free, the remaining half of the gain is taxed at the taxpayer’s marginal tax rate. This discount system on capital gains has been in place since 1999. Capital gains tax (CGT) was introduced in 1985 and is applied to realised gains and losses on assets acquired after 19 September 1985. If an asset was purchased prior to the introduction of CGT, then it is exempt from CGT when sold. From 1985 to 1989 an indexation system was used where inflation factors were applied to the original cost, so only the “real/after inflation” gain was taxed. At this stage there has been no indication whether the changes, if introduced, would be grandfathered, to spare existing investors from any initial pain.

Keeping Your Car Logbook Simple and ATO-Compliant

By Kathryn Hamilton • April 15, 2026
Keeping a car logbook is an important part of managing your vehicle expenses, especially if you’re looking to maximise your tax deductions and GST claims or reduce your FBT liability. The Australian Taxation Office requires you to keep a logbook for a minimum continuous period of 12 weeks to establish your business-use percentage. Each trip should include the date, start and end times, kilometres travelled, and the purpose of the journey. Your logbook needs to reflect your typical vehicle use and can generally be relied on for up to five years, as long as your usage doesn’t significantly change. You’ll also need to record your vehicle’s odometer readings at the start and end of each FBT year and financial year. For many small business owners and tradies, keeping a car logbook is necessary but often pushed aside during busy workdays. Manually recording trips can be time-consuming, and it’s easy to forget details after the fact. There are now several apps available that reduce the manual effort of keeping a logbook. One we often recommend, which complies with ATO requirements, is Driversnote. Driversnote is designed to simplify the process by using GPS tracking to automatically record trips. This helps ensure journeys are logged consistently without relying on manual entry. Trips can be easily categorised as business or personal, and the app generates reports that align with ATO logbook requirements. This can make it easier to stay organised and provide accurate information at tax time. The app also stores data securely and keeps a history of trips, which can be useful if you ever need to review your records. For those who regularly use their vehicle for work, tools like Driversnote offer a practical way to maintain a logbook without the usual hassle—helping keep everything accurate, organised, and in one place. If you’re unsure whether a logbook is right for your situation, contact us— one of our team can help you work out the best way to track your vehicle use and ensure your records are accurate for FBT and tax time.

Extension of instant asset write off

By Jessie Nippers • April 7, 2026
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Fringe Benefits Tax (FBT): What Business Owners Need to Know

By Jessie Lakin • March 31, 2026
Fringe Benefits Tax (FBT) is a separate tax from GST and income tax that applies when a business provides benefits to employees or other associates. With the FBT year ending on 31 March , now is the time to review any benefits provided over the past 12 months to ensure you remain compliant. Understanding Fringe Benefits? A fringe benefit is any non-cash benefit, reimbursement, or expense paid by a business that is provided instead of, or in addition to, salary and wages. A simple way to think about it is if the business is paying for a personal expense or private use of a business asset, it may be a fringe benefit. Who FBT Applies To? FBT may apply where benefits are provided to individuals who are employees or are otherwise associated with the business. This includes: Employees Company directors Associates of employees or directors (including family members) Trust beneficiaries who are involved in, or connected to, the business  For example, where a director is provided with the use of a company vehicle for private purposes, an FBT liability may arise irrespective of whether the director receives remuneration in the form wages. For businesses operating through a company or trust structure, it’s important to remember that the business is a separate legal entity . This means personal use of business assets is treated similarly to providing a benefit to an employee. Important Exception Sole traders or partnership owners using their own business assets personally do not trigger FBT. However, FBT can still apply if these businesses provide benefits to employees. Common FBT Areas for businesses While FBT can apply in many situations, the most common areas we see are: 1. Car Fringe Benefits If an employee, director or associate uses a company car for private purposes, FBT applies. Even parking the car at home overnight counts as personal use. TIP - Use the logbook method to track business-related travel and reduce FBT liability. 2. Entertainment Benefits Providing employees, directors or associates with free meals, drinks, and staff events (such as Christmas parties) may be subject to FBT. TIP - Limit to under $300 per person for minor benefits exemption, as this threshold deems the value insignificant. 3. Expense Payment Benefits If the business pays for personal costs on behalf of an employee or associate, this may be considered a fringe benefit. TIP - It’s important to distinguish between personal and work-related expenses. If the expense is work-related, the employer may be able to classify it as a business expense instead. 4. Housing and Accommodation Benefits Providing employees with rent-free housing or at a reduced rent can trigger FBT. TIP - Employers may be eligible for exemptions if housing is necessary for employees in remote areas or living away from their usual place of residence to carry out their duties. What you should to do If you believe you may be providing a fringe benefit to an employee, director, or associate, we recommend the following: Ensure accurate records and supporting documentation are maintained Complete the annual FBT questionnaire provided by Green Taylor Partners Provide all relevant information to enable us to assess whether FBT applies and assist you in meeting your compliance obligations
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