Key Performance Indicators - KPI

AAA

DEFINITION of 'Key Performance Indicators - KPI'

A set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their strategic and operational goals. KPIs vary between companies and industries, depending on their priorities or performance criteria. Also referred to as "key success indicators (KSI)".

INVESTOPEDIA EXPLAINS 'Key Performance Indicators - KPI'

A company must establish its strategic and operational goals and then choose the KPIs which best reflect those goals. For example, if a software company's goal is to have the fastest growth in its industry, its main performance indicator may be the measure of revenue growth year-on-year. A company's KPIs will be stated in its annual report. Also, KPIs will often be industry-wide standards, like "same store sales", in the retail sector.

VIDEO

Loading the player...
RELATED TERMS
  1. Earnings Per Share - EPS

    The portion of a company's profit allocated to each outstanding ...
  2. Revenue

    The amount of money that a company actually receives during a ...
  3. Operating Income

    The amount of profit realized from a business's operations after ...
  4. Sales Per Share

    A ratio that computes the total revenue earned per share over ...
  5. Profit Margin

    A ratio of profitability calculated as net income divided by ...
  6. Same-Store Sales

    A statistic used in retail industry analysis that compares the ...
RELATED FAQS
  1. Why is the TTM (trailing twelve months) important in finance?

    Using trailing 12-month (TTM) figures is an effective way to analyze the most recent financial data in an annualized format. ... Read Full Answer >>
  2. Can the Herfindahl-Hirschman Index be used to determine competitive balance in professional ...

    Although the measurement and analysis of a company's key performance indicators (KPIs) vary by company, it is important to ... Read Full Answer >>
  3. What are the most commonly used key performance metrics (KPIs) for small business ...

    Developing and tracking key performance indicators (KPIs) are pertinent aspects of running a successful small business. KPIs ... Read Full Answer >>
  4. How can key performance metrics (KPIs) help evaluate employees?

    Key performance indicators (KPIs) can help evaluate employees by measuring how well they perform in meeting individual goals ... Read Full Answer >>
  5. How does a company decide which key performance indicators (KPIs) to use?

    A company's key performance indicators (KPIs) should be considered specific success metrics for that individual company. ... Read Full Answer >>
  6. What should be included in a restaurant business model?

    The most important elements of a restaurant business model include the restaurant's unique value proposition, menu choices, ... Read Full Answer >>
Related Articles
  1. Professionals

    What are KPIs?

    Key performance indicators (KPI) measure success in attaining predetermined goals.
  2. Investing Basics

    Industry Handbook

    In this feature, we take an in-depth look at the various techniques that determine the value and investment quality of companies from an industry perspective.
  3. Markets

    Introduction To Fundamental Analysis

    Learn this easy-to-understand technique of analyzing a company's financial statements and reports.
  4. Economics

    How to Do a Cost-Benefit Analysis

    The benefits of a given situation or business-related action are summed and then the costs associated with taking that action are subtracted.
  5. Professionals

    How Financial Advisors Pick Client Investments

    How advisors choose investment portfolios is varied, and investors are wise to check with theirs to find out how he or she makes their investment choices.
  6. Entrepreneurship

    The Pros & Cons Of Using Coupons For Your Business

    Coupons can drive business to your store – you just need to make sure it's profitable business. Here are strategies that work.
  7. Economics

    What's Involved in Customer Service?

    Customer service is the part of a business tasked with enhancing customer satisfaction.
  8. Economics

    What is Involved in Inventory Management?

    Inventory management refers to the theories, functions and management skills involved in controlling an inventory.
  9. Investing

    How Lean Six Sigma Works

    Based on both lean management and Six Sigma, Lean Six Sigma helps companies create a management system that promotes perfection through efficiency.
  10. Economics

    What Does Accretive Mean?

    In the business world, accretive most often to refers to additional growth from outside sources.

You May Also Like

Hot Definitions
  1. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  2. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
  3. Variance

    The spread between numbers in a data set, measuring Variance is calculated by taking the differences between each number ...
  4. Terminal Value - TV

    The value of a bond at maturity, or of an asset at a specified, future valuation date, taking into account factors such as ...
  5. Rule Of 70

    A way to estimate the number of years it takes for a certain variable to double. The rule of 70 states that in order to estimate ...
  6. Risk Premium

    The return in excess of the risk-free rate of return that an investment is expected to yield. An asset's risk premium is ...
Trading Center