In an increasingly volatile economy, the ability to make swift, well-informed decisions is what separates the SMEs that thrive from those that merely survive. Effective management control begins with monitoring the right indicators.
1. EBITDA Margin
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) is the most reliable measure of a company's operating profitability. For industrial SMEs, a healthy EBITDA margin typically sits between 8% and 15%.
2. Cash Conversion Cycle
This indicator measures the time that elapses between paying suppliers and collecting payment from customers. The shorter the cycle, the more efficient the company's treasury management. The aim should be to shorten this period progressively.
3. Gearing Ratio
The ratio of debt to equity reveals the company's financial exposure. A ratio below 2:1 is generally considered healthy, although this varies from sector to sector.
Tracking the numbers is not enough — you need to understand the trends and act on deviations before they take hold.
4. Days Sales Outstanding
DSO indicates how many days, on average, customers take to pay. In Portugal the average hovers around 60 days, but the goal should be to bring it below 45 days through effective credit control policies.
5. Customer Concentration Index
Excessive reliance on a handful of customers poses a significant risk. Ideally, no single customer should account for more than 20% of the company's total turnover.
At Ravina Promissora, we implement management control dashboards that enable managers to monitor these indicators in real time, supporting sharper strategic decision-making.