Investors rely on metrics that tell the real story of your business. These numbers reflect growth, profitability, and financial strength.

From revenue and profit margins to customer metrics like churn, each data point helps investors gauge risk and reward. Knowing what to track also helps you prepare for fundraising conversations with confidence.

With expert guidance, you can present the right mix of financial and customer-focused numbers to show true business health. FlowFi helps companies stay investor-ready with clean reporting and insights that matter.

This guide breaks down which metrics investors prioritize and how to use them to your advantage.

Core Financial Metrics

To understand how your business looks to investors, focus on a few key numbers that show growth, profitability, and efficiency. These metrics give a clear picture of your financial health and how well your business uses its resources. Knowing them helps you make smarter decisions and communicate value.

Revenue Growth

Revenue growth shows how much your sales increase over time. Investors watch this closely because steady growth means your business is gaining customers or increasing sales. It’s often measured as a percentage increase from one period to the next, like year-over-year or quarter-over-quarter growth.

Tracking revenue growth helps you spot trends early. For example, high growth might signal a successful product launch, while slowing growth could mean it’s time to adjust your strategy.

It’s important to compare your growth to your industry’s average to understand if you’re keeping pace. Consistent growth builds investor confidence because it shows your business can grow sustainably.

Profit Margins

Profit margins tell you how much money you keep from your sales after costs. There are a few types to watch:

• Gross Margin: Revenue minus the cost of goods sold (COGS). It shows how efficiently you produce or buy your products.

• Operating Margin: Profit after operating expenses like rent and salaries.

• Net Margin: The final profit after all expenses and taxes.

Higher margins mean you keep more money from each sale, which gives you more freedom to reinvest or pay debts. Investors prefer businesses with growing or stable margins because it means you control costs well and operate efficiently.

Lower margins aren’t always bad; they can mean you’re investing in growth. Just be ready to explain your strategy and when you expect margins to improve.

Earnings Per Share

Earnings per share (EPS) tells investors how much profit your company makes for each share of stock. It's a quick way to measure your profitability on a per-share basis, making it easier to compare with other businesses.

EPS grows when your net income goes up or when you reduce the number of shares outstanding. Investors watch this closely because rising EPS usually means your company is more valuable and profitable.

If you don’t have a public company, think of EPS as the profit slice each investor would get. For startups or private businesses, focusing on net income per share class is a useful way to show profitability trends.

Return on Equity

Return on equity (ROE) measures how well your business uses investors' money to make a profit. It’s net income divided by shareholders' equity, shown as a percentage.

If your ROE is high, it means you’re generating strong returns with the investment you have. That’s a big plus for investors because it shows efficient use of capital.

Lower ROE may suggest you’re not using funds effectively, or you need to rethink your business model or costs. Tracking this over time helps you focus on improving how your business grows its value for shareholders.

Key Performance Indicators for Investors

When you look at a business’s numbers, some metrics stand out because they show how efficiently the company grows and keeps customers. Understanding the cost to get a customer, how much revenue each customer brings, and how many leave can help you spot strong investments.

Customer Acquisition Cost

Customer Acquisition Cost (CAC) tells you how much money it takes to win a new customer. This includes marketing, sales, and all expenses involved in bringing someone to buy from you.

A low CAC means your business gets customers cheaply, which helps profits. But if it’s too low, it might mean you’re not investing enough to grow. A balance is key: spending smartly to attract good customers without wasting cash.

Tracking CAC over time reveals whether your sales strategies are effective. If CAC goes up, it’s a red flag—you may need to adjust marketing or rethink pricing.

Lifetime Value of a Customer

Lifetime Value (LTV) estimates how much money a customer will bring in during their time with your business. It’s one of the strongest signs of the health of your revenue.

A high LTV means customers keep buying and likely recommend you. You want your LTV to be several times higher than your CAC. This gap means customers return enough to cover how much you spent to get them.

Knowing LTV also helps you decide how much to invest in marketing. When LTV and CAC are balanced well, you grow sustainably without burning through cash.

Churn Rate

Churn Rate shows how many customers stop doing business with you over a period. High churn means losing customers fast, which can hurt growth even if you get new ones quickly.

Understanding churn helps you identify weak points, such as poor service or product issues. Lower churn means more loyal customers, steady income, and stronger long-term growth.

Keep an eye on churn because it affects your LTV and overall value. Fixing churn issues can boost profits and make your business more attractive to investors.

Valuation Metrics That Matter

When you look at a business’s value, it’s important to dig into numbers that show how much the company earns, how it handles debt, and how sales translate into value. These key measures help you see if the business is priced fairly and if it has solid financial health.

SEC Disclosure Requirements for Public Companies

Public companies must follow strict reporting rules. The U.S. Securities and Exchange Commission (SEC) requires disclosures of key financial metrics, risks, and management discussions in quarterly (10-Q) and annual (10-K) filings.

These disclosures provide transparency for investors when comparing companies. Even private startups can learn from these requirements by adopting clear, consistent reporting.

Including detailed disclosures upfront shows investors that your business values transparency and accountability.

Price-to-Earnings Ratio

The price-to-earnings ratio, or P/E ratio, compares the stock price to the company’s earnings per share. It tells you how much investors are willing to pay for each dollar of profit. A low P/E might mean the stock is undervalued or earnings are high compared to the price.

You want to compare this ratio to other companies in the same industry because what’s “low” in one business might be “high” in another. It’s simple but powerful—it shows how the market values profitability.

Enterprise Value to EBITDA

Enterprise Value to EBITDA (EV/EBITDA) is a way to compare a company’s total value—including debt and cash—to profits before interest, taxes, depreciation, and amortization. This metric gives you a clearer view of how the business performs, ignoring how it’s financed or taxed.

EV/EBITDA helps you see if the company’s price matches its actual earnings power. A lower ratio generally means the company may be priced attractively. It’s especially useful when you want to understand cash flow potential, a key factor before making investment decisions.

Price-to-Sales Ratio

The price-to-sales ratio looks at how a company’s stock price compares to its total sales or revenue. It’s useful if the business isn’t yet profitable because it focuses on top-line growth instead.

If you’re tracking a startup or a company with thin profit margins, this ratio helps you judge if the market expects strong growth. A high ratio can mean investors are betting on future sales increases, so watch this number closely for signs of potential or overvaluation.

Liquidity and Cash Flow Insights

Knowing how much cash your business has on hand and how quickly it moves can help you make better decisions. These numbers tell you if you can pay bills, cover emergencies, and invest in growth without running into trouble.

Operating Cash Flow

Operating cash flow (OCF) shows how much cash your business generates from its core activities. It’s the money left after paying everyday costs like salaries, rent, and supplies. Investors look closely at OCF because it reflects your company’s real ability to generate cash, not just profits on paper.

A positive OCF means your business is healthy and can handle expenses without borrowing. If it’s negative, you might be relying too much on loans or investments to stay afloat. Tracking OCF over time helps spot trends, so you can adjust spending or improve sales.

Current Ratio

The current ratio measures your business’s short-term financial strength. You calculate it by dividing current assets (like cash, inventory, and receivables) by current liabilities (bills and debts due soon). A current ratio above 1 means you have more assets than debts, which is a good sign.

Investors like to see a current ratio around 1.5 to 3 because it indicates you can cover your short-term obligations comfortably. Too high, and it might mean cash isn’t being used efficiently. Too low, and you could face trouble paying bills or managing cash flow during tight times.

Free Cash Flow

Free cash flow (FCF) is the cash left after paying for operating expenses and necessary investments, like new equipment or software. This figure is important because it shows how much money you truly have available to grow your business, pay dividends, or reduce debt.

For investors, FCF signals financial flexibility. A steady or growing FCF means you’re generating real cash and can fund future projects or return value to shareholders. Negative free cash flow isn’t always bad—it might mean you’re investing for growth. But consistently low FCF can be a warning to review your spending and cash management.

Growth and Scalability Indicators

Investors want to see numbers that prove your business isn't just growing but can keep growing. They look closely at how you expand your reach in the market and how your key revenue figures improve each year. These show whether your business can handle more customers and sales over time.

Market Share Expansion

Market share tells investors how much of your industry’s business you control compared to your competitors. Growing your market share means you're attracting more customers or sales faster than others.

You can track this by comparing your sales or users to the total market size. A rising market share signals you are winning over customers and often points to strong product appeal or smart marketing. It also shows investors that your position is improving, not just your revenue.

If your market share is stable or shrinking, it raises questions about future growth. So focus on clear strategies to reach new segments and keep your share growing.

Year-Over-Year Growth

Year-over-year (YoY) growth measures how much your revenue or other key metrics increase compared to the same period last year. It gives investors a straightforward view of your business’s momentum over time.

Strong YoY growth is a signal that your business model works and can scale. Investors will look for consistent growth rather than one big jump. They want to understand if your sales, recurring revenue, or customer base keep expanding steadily.

You should track YoY growth for revenue, recurring bookings like MRR/ARR, and user numbers. Showing steady, positive trends helps build investor confidence in your business’s future.

Risk Assessment Metrics

Understanding risk assessment helps you spot financial risks before they affect your business. Two key numbers to watch are how much debt you have compared to your equity and how well you can cover interest payments on that debt. These tell you if your business can manage its debts safely.

Debt-to-Equity Ratio

The debt-to-equity ratio shows how much debt your business uses compared to its own money (equity). It’s calculated by dividing total debt by total equity.

• What it means: A high ratio means your business relies more on debt to fund operations, which can be risky if income falls.

• Why it matters: Investors and lenders use this ratio to decide if your business is over-leveraged or stable.

• Ideal range: It depends on your industry, but a ratio below 1.0 usually means you use less debt than your own money.

Tracking this ratio lets you see if you're taking on more risk by borrowing. It’s a quick way to check your financial health.

Interest Coverage Ratio

The interest coverage ratio tells you how easily your business can pay the interest on its debts using operating income.

• How to calculate: Divide your operating income by the interest expense.

• What to look for: A higher ratio means you have enough earnings to cover interest payments comfortably.

• Why it’s important: If this ratio drops below 1.5, it may signal trouble. This shows your business might struggle to meet interest costs, which can scare investors and lenders.

By keeping an eye on this metric, you ensure your earnings cover interest, keeping your business financially healthy and attractive to stakeholders.

Non-Financial Metrics Investors Monitor

Investors look beyond dollars to understand how well your business is set up for long-term success. They focus on how satisfied your customers are and whether they stick around. These insights show whether your business has real staying power and growth potential.

Customer Retention Rate

Customer retention rate measures how many customers keep buying from you over time. It tells investors if your product or service truly meets their needs. A high retention rate means you’re not just attracting customers—you’re keeping them.

Why does this matter? Keeping customers costs less than finding new ones. Investors see strong retention as a sign of loyalty and steady revenue. It shows your business has repeat buyers who value what you offer.

To improve retention, focus on good customer service, product quality, and ongoing engagement. Tracking this rate helps you spot early signs of trouble, so you can act before customers leave.

Net Promoter Score

Net Promoter Score (NPS) gauges how likely your customers are to recommend you to others. It’s a simple way to measure customer happiness and word-of-mouth buzz.

Investors pay attention to NPS because it signals how strong your brand is. A high score means customers trust your business enough to tell friends and colleagues. This kind of marketing drives growth with less cost.

To get your NPS, you ask customers one question: “How likely are you to recommend us?” Answers range from 0-10, grouped into promoters, passives, and detractors. Improving your NPS means reducing unhappy customers and turning more of them into promoters through great experiences.

Show the Right Metrics, Win Investor Trust

The right investor metrics go beyond numbers—they tell a story about growth, profitability, and long-term potential. By tracking financial KPIs, valuation ratios, and customer insights, you prepare your business to stand out in investor discussions.

Ready to highlight the metrics that matter? FlowFi helps founders track, organize, and present numbers that build investor confidence.

Show the Right Metrics, Win Investor Trust

The right investor metrics go beyond numbers—they tell a story about growth, profitability, and long-term potential. By tracking financial KPIs, valuation ratios, and customer insights, you prepare your business to stand out in investor discussions.

Ready to highlight the metrics that matter? FlowFi helps founders track, organize, and present numbers that build investor confidence.

Reach out to get clarity on your numbers and present metrics investors actually care about.

Frequently Asked Questions

Investors focus on numbers that show a company's financial health, growth potential, and real value. You need to know which ratios and key performance indicators (KPIs) reveal strong profits, smart spending, and steady growth.

What are the key financial ratios every investor should analyze?

Look at the Price-to-Earnings (P/E) ratio to understand how the stock is valued against its earnings. Debt-to-Equity ratio shows how a company manages its debt compared to its own funds.

Also, Profit Margin tells you how much profit the company keeps from its sales. Return on Equity (ROE) reveals how well management uses your money to generate profits.

Which valuation metrics are crucial when assessing stock performance?

You want to focus on the Price-to-Book (P/B) ratio to see if a stock trades near its actual net asset value. The Enterprise Value to EBITDA (EV/EBITDA) ratio helps compare companies by looking at earnings before interest, taxes, depreciation, and amortization.

These metrics help you find undervalued stocks or spot overpriced ones.

Can you list essential KPIs to evaluate when investing?

Keep an eye on Revenue Growth to track if the company’s sales are increasing over time. Customer Acquisition Cost (CAC) and Customer Lifetime Value (LTV) are crucial for understanding how effectively a business gains and keeps customers.

For SaaS or subscription models, Monthly Recurring Revenue (MRR) and churn rate matter a lot.

How do investors determine the potential growth of a stock?

Look for consistent revenue and profit growth, along with expanding customer numbers. Strong cash flow and healthy profit margins indicate a company can grow without burning cash. Growth can also be identified through market expansion plans or new product lines.

What investment evaluation techniques does Warren Buffett recommend?

Buffett focuses on buying companies with strong fundamentals, a durable competitive advantage, and honest management. He values intrinsic worth, meaning you should compare the stock price to the company’s true value. He advises patience and investing for the long term.

What criteria do value investors prioritize when selecting stocks?

Value investors look for low price-to-earnings and price-to-book ratios, often seeking stocks undervalued by the market. They want companies with stable earnings, good cash flow, and manageable debt. The idea is to buy quality companies at a price lower than their real worth.