The next Ask Ruth webinar will be this Thursday, April 30, 2026, at 11 AM Eastern time!
I’ll finish the topic I started last month with balance sheets. This month’s topic will be:
Beware of Subtle Changes in Balance Sheet Debt to Equity and Usage Ratio Trend Lines
Where to look if these ratios are headed in the wrong direction.
And as always, after the presentation I’ll stop the recording and you can ask any financial question about your business.
The Most Important KPI Business Owners Should Track
Now Onto Profitable Business
Business owners talk about different metrics for their business: service ticket revenue, closing percentages, gross margins, and more. Many miss the most important Key Performance Indicator, or KPI, to track:
Net Profit Per Revenue Generating Unit.
Why This KPI Matters
If this KPI is in line with what you want it to be, the others will be too.
A revenue generating unit is the basic way that your company makes money.
For example:
- For a car wash, it’s the number of cars that go through the car wash.
- For a gym, it’s the number of members that use the gym.
- For a restaurant, it’s the number of meals served.
- For a home or business services company, such as plumbing, heating and air, or lawncare, it’s the number of billable hours that field employees bill customers.
- For marketing companies, legal firms, or accounting firms, it’s the number of hours billed to clients for their work.
Focusing on and tracking these units every day is the basis for ensuring your company has enough revenue to be profitable.
How to Calculate Net Profit Per Revenue Generating Unit
The calculation is simple:
Net operating profit ÷ total revenue generating units = net profit per revenue generating unit
Many times, it’s a “slap in the face” when you calculate this number for the first time.
We calculated it in a recent class and the highest net profit per hour was $3.60. The lowest was less than $1. At least they were positive.
A negative net profit per revenue generating unit means that you are paying your customers to provide products and services to them.
What This Number Really Shows You
When you calculate this number, you really see what you are taking home.
You’re not looking at sales. You’re not looking at gross profit. You’re including all of your business expenses, including overhead, to see the true bottom line.
You’re not fooling yourself with gross profit per man day or any other calculation based on gross profit.
This is the most important KPI to track. If it is in line, your company’s other KPIs will be in line too.
Spring/Summer NASBA sponsored group live courses (6 CPE):
Understanding Financial Statement Trends
- Tuesday, May 19, 2026 – Duluth, GA
- Tuesday, July 14, 2026 – Austin, TX (Texas approved for CPE)
- Thursday, July 16, 2026 – Dallas, TX (Texas approved for CPE)
- Wednesday, August 12, 2026 – Honolulu, HI (Hawaii approved for CPE)
- Friday, August 14, 2026 – Kona, HI (Hawaii approved for CPE)
Want to see whether Financially Fit Business is a fit for you and your clients?
How AI Saved 25 Hours of a CPA’s Work
AI saved a CPA 25 hours of manual work. His client appreciated it too.
How?
Find out in this podcast with Peyton Witt, CPA.
He used Claude to clean up vendor invoices in less than an hour. Discover what he did that saved time for his staff and money for his client.
Click below to listen: https://financiallyfitbusinesspodcast.podbean.com/
Books/Audios that could help your business and you!
Have you ever wanted to not be around someone…or want to be around someone just from a “feeling you get”?
Kate Murphy explains that emotions, moods, attitudes, and behaviors can be as infectious as any disease. And, if you hire the “bad apple” it can ruin your culture.
Find out how to avoid the negativity and more.
Order on Amazon: https://amzn.to/4v4SlDi
