Companies are generating more data than ever before. When it comes to analyzing and utilizing this data, many companies are under the false impression that getting insights is difficult or time consuming. To help companies better understand how Peerview Data’s process of Big Data, analytics and benchmarking software process works, we're continuing a series of blog posts that examine the individual performance metrics that are at the heart of this analysis.
- KPI: Net Income Growth Rate
- DEFINITION: Net Income Growth Rate measure the percent increase or decrease in net income from one period to the next, usually years, quarters or months.
- FORMULA: (net income for current period/net income for previous period)-1
- BENCHMARK: Varies depending on life cycle of industry and company, as well as company objectives
- SIGNIFICANCE: Net Income Growth is often seen as a sign a company's efficiency from an operational standpoint and desirability from an investment standpoint, but is influenced heavily by a company's goals and challenges and should therefore be assessed in conjunction with other metrics like revenue growth, margins, industry life stage, etc.
- RECOMMENDATION: No or low Net Income Growth: assess in conjunction with revenue growth goals, costs, strength of product/market fit and industry life cycle (new-growth-maturity-decline); high Net Income Growth: assess in conjunction with absolute revenue growth, allocation of resources and industry life cycle (new-growth-maturity-decline).
- RELATED: Revenue Growth Rate, margins, EBITDA, Cash Flow, Leverage and Liquidity, among others.