# Financial Metrics Guide

Healthy ranges for B2B services/agency businesses. Adjust thresholds for your revenue range.

## Revenue & Profitability

| Metric | 🟢 Green | 🟡 Yellow | 🔴 Red |
|---|---|---|---|
| TTM Revenue Growth | >10% YoY | 0-10% YoY | Declining |
| Net Income Margin | >10% | 0-10% | Negative |
| Gross Margin | >60% | 45-60% | <45% |
| Revenue per Employee | >$150K | $100-150K | <$100K |
| Client Concentration | No client >15% | One client 15-25% | One client >25% |

## Cost Structure (% of Revenue)

| Metric | 🟢 Green | 🟡 Yellow | 🔴 Red |
|---|---|---|---|
| Total People Costs | <65% | 65-75% | >75% |
| COGS (direct delivery) | <50% | 50-60% | >60% |
| Sales & Marketing | 10-20% | 20-30% | >30% |
| G&A | <15% | 15-25% | >25% |
| Tool/Subscription Costs | <8% | 8-12% | >12% |
| Contractor % of People | <30% | 30-50% | >50% |

## Cash & Liquidity

| Metric | 🟢 Green | 🟡 Yellow | 🔴 Red |
|---|---|---|---|
| Cash Runway (months) | >3 months | 1-3 months | <1 month |
| AR Days Outstanding | <45 days | 45-60 days | >60 days |
| AP Days Outstanding | <45 days | 45-60 days | >60 days |
| Current Ratio (CA/CL) | >1.5 | 1.0-1.5 | <1.0 |

## Debt & Obligations

| Metric | 🟢 Green | 🟡 Yellow | 🔴 Red |
|---|---|---|---|
| Debt-to-Revenue | <0.5x | 0.5-1.0x | >1.0x |
| Debt Service Coverage | >2.0x | 1.0-2.0x | <1.0x |
| Interest as % of Revenue | <3% | 3-5% | >5% |

## Anomaly Detection

Flag these automatically:
- Any single expense line item >$5,000 not in payroll/rent/amortization
- Any category with >10% MoM increase
- Any new vendor with >$2,000 spend
- Owner expenses >$10K/month
- Recruiting spend >$8K/month sustained
- Revenue from any single client >20% of total

## Scaling Thresholds by Revenue

These benchmarks shift as you grow:

| Revenue Range | Target Gross Margin | Target People % | Target G&A % |
|---|---|---|---|
| <$1M | >50% | <70% | <20% |
| $1-3M | >55% | <65% | <18% |
| $3-10M | >60% | <60% | <15% |
| $10M+ | >65% | <55% | <12% |