You do not need to track every financial ratio to understand how your business is doing. Start with a few measures that answer practical questions, and keep the records behind them current.
Gross margin: what remains after direct costs?
Gross profit is sales revenue minus the direct cost of the goods or services sold. Gross margin expresses that amount as a share of revenue. For example, if an item sells for KES 4,500 and the item itself cost KES 3,800, the gross profit before other costs is KES 700. Transport, rent, wages, and other expenses still need to be considered.
Compare similar products or periods, and make sure you include the costs relevant to your calculation. A margin figure is only as useful as the records behind it.
Cash flow: when does money come in and go out?
Profit and cash flow answer different questions. A sale made on credit may count as revenue before the customer pays. List expected customer payments alongside upcoming costs such as rent, stock purchases, wages, and bills. This can help you see when cash may be tight and plan ahead.
Sales trends: what is changing?
Compare sales across similar periods. A weekly comparison may help a shop understand seasonal patterns; a service business may prefer monthly totals. Look for changes, then check what else was happening before deciding why they occurred.
SokoWise income and expense tools help you record activity and review it by source, category, and time period. They can support your bookkeeping, but do not replace professional accounting or tax advice.
Start with the measure that answers a current business question. You can add more detail when it helps you make a decision.