# Key Performance Indicators (Relationship Breakdown)

KPI Breakdown

**1. Interest Coverage**

EBIT to Interest Expense

Affected by pretax income plus interest expense divided by interest expense

**2. Fixed Assets Turnover**

Affected by total revenues divided by fixed assets (book value as entered into BS)

**3. Receivables (Conversion)**

Affected by accounts receivable and total revenues

**4. Inventory Turnover**

Affected by total revenues divided by inventory

**5. Return on Equity**

Affected by pretax income and total equity - and total equity is equal to total assets minus total liabilities

**6. Debt-to-Equity**

Affected by total liabilities divided by total equity - and total equity is equal to total assets minus total liabilities

**7. Cash-to-Debt**

Affected by cash divided by total liabilities

**8. Income to Revenue (Pre-Tax)**

Affected by pretax income divided by total revenues

**9. Cash Flow to Revenue**

Affected by “discretionary earnings” divided by total revenues – and discretionary earnings are equal to the sum of pretax income plus owner compensation plus interest plus depreciation and amortization expense OR EBITDA plus owner compensation

**10. Receivables to Income (Pre-Tax)**

Affected to total accounts receivable divided by pretax income

**11. Inventory to Income (Pretax)**

Affected by total inventory divided by pretax income

**12. Fixed Assets to Income (Pretax)**

Affected by total fixed assets (book value) divided by pretax profits

**13. Total Debt to Income (Pretax)**

Affected by total liabilities divided by pretax income