SMB Financial Benchmarks Australia: Key Ratios Every Business Should Track
- Future Accounting
- 3 days ago
- 3 min read
Written by: Melissa Cunliffe (CA)
Discover the power of SMB financial benchmarks Australia for smarter business decisions
Running a small to medium-sized business in Australia comes with plenty of challenges, and that’s why understanding SMB financial benchmarks Australia can make all the difference. Rising costs, compliance, competition, and managing cash flow are just the beginning. But how do you really know how your business is performing? That’s where key performance ratios come in.
Why SMB financial benchmarks matter in Australia
These financial metrics give you visibility over profitability, liquidity, efficiency, and risk. When compared to industry benchmarks, they help you make smarter, more strategic decisions. SMB financial benchmarks Australia, such as those from the ATO, industry associations, and the ABS, are essential tools to guide business growth.
Key performance ratios explained with examples
Gross Profit Margin
Shows the percentage of revenue left after covering direct costs (COGS). A measure of production and pricing efficiency.
Formula: (Revenue – COGS) ÷ Revenue × 100
Example: Revenue: $250,000; COGS: $150,000 → Gross Profit Margin = 40%
Benchmark: Retailers in Australia typically aim for 30–50% gross margins.
Net Profit Margin
Shows the percentage of revenue that remains as profit after all expenses.
Formula: Net Profit ÷ Revenue × 100
Example: Net Profit: $25,000; Revenue: $250,000 → Net Profit Margin = 10%
Benchmark: Many Aussie SMBs operate at 5–15%.
Current Ratio
Measures liquidity — your ability to meet short-term obligations.
Formula: Current Assets ÷ Current Liabilities
Example: Current Assets: $80,000; Liabilities: $40,000 → Current Ratio = 2.0
Benchmark: A healthy range is 1.5 to 2.5.
Accounts Receivable Turnover
Indicates how quickly invoices are collected.
Formula: Net Credit Sales ÷ Average Accounts Receivable
Example: $300,000 ÷ $50,000 → 6 times per year (≈ every 61 days)
Benchmark: Aim for 30–45 days unless extended terms are standard.
Inventory Turnover
Shows how often inventory is sold and replaced.
Formula: COGS ÷ Average Inventory
Example: $200,000 ÷ $50,000 → 4 times per year
Interpretation: Turning stock over quarterly is healthy; low turnover may indicate overstocking.
Return on Assets (ROA)
Measures how effectively assets generate profit.
Formula: Net Profit ÷ Total Assets × 100
Example: $30,000 ÷ $150,000 = 20%
Benchmark: 10–20% is often considered healthy.
Debt-to-Equity Ratio
Shows financial leverage.
Formula: Total Liabilities ÷ Owner’s Equity
Example: $100,000 ÷ $125,000 = 0.8
Benchmark: A ratio under 1.0 is stable; lenders prefer below 1.5.
Understanding EBITDA and why it matters for finance
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) is a standardised measure of operational profitability. It provides a clearer view of business performance by removing financing and tax variables.
Why it matters:
Helps when applying for loans or investment
Key for valuations or preparing for sale
Seen by banks as a proxy for cash flow
Example:
Net Profit: $40,000 + Interest $5,000 + Taxes $10,000 + Depreciation $8,000 + Amortisation $2,000 = EBITDA $65,000.
How to use ratios and benchmarks effectively
Compare your ratios to ATO or industry benchmarks.
Track performance monthly or quarterly.
Use them to guide decisions like pricing, cost control, or collections.
Present key ratios and EBITDA when applying for finance.
By actively monitoring SMB financial benchmarks Australia, you gain confidence in decisions and opportunities for growth.
Final thoughts: grow your business with the right benchmarks
Running a business without tracking performance metrics is like driving without a dashboard. Ratios and benchmarks may sound like accountant talk, but they are powerful everyday tools. Whether you’re in trades, retail, hospitality, or services, keeping an eye on these key ratios and understanding EBITDA puts you in a stronger position to grow, secure finance, or even prepare for sale.
Understanding your SMB financial benchmarks Australia is the first step towards smarter decisions and stronger growth. Our team specialises in helping small businesses track, analyse, and act on these insights. Book an appointment with us today and start building a more profitable future.
Disclaimer
This article does not constitute financial advice and is for general information only. It does not take into account any individual’s personal objectives, situation or needs, and is not intended as professional advice. Any similarity to an individual’s personal circumstances and the examples provided in this article is purely coincidental. Any person acting upon such information without receiving specific advice, does so entirely at their own risk.
Authorisation under an Australian Financial Services Licence (AFSL) is not required in the provision of this article and the author plus Future Accounting Group Pty Ltd is not acting in its capacity as an Australian Financial Services Licence holder
Liability limited by a scheme approved under professional standards legislation.
