Financial Ratios & KPIs Every GC Tracks

Welcome

Hello, and welcome. This is Super Structures General Contractors — a national general contractor headquartered in Powhatan, Virginia — here to help you and your clients build something that lasts. We're glad you're with us, and we look forward to connecting with you.

Roll up your sleeves — we're getting into Financial Ratios & KPIs Every GC Tracks. Here's the part that actually matters on the job: Track a short dashboard of ratios monthly — working capital and current ratio (liquidity), gross/net margin (profit), DSO and backlog (efficiency), debt-to-equity (leverage), and EMR — and watch the failure-predictors (falling working capital, rising underbillings, margin fade, aging AR) to catch trouble early. This is how the pros pull ahead — and now it's yours.

Raw numbers become useful as ratios and KPIs tracked over time. The essential set for a contractor:

• Liquidity: current ratio, quick ratio, working capital.
• Profitability: gross margin, net margin, return on equity.
• Leverage: debt-to-equity.
• Efficiency: days sales outstanding (DSO / days in AR), days in AP, backlog, WIP fade/gain.
• Safety/insurance: the EMR (experience modification rate).

Going Deeper (Intermediate)

Know healthy targets: a current ratio above ~1.2–1.5, solid gross/net margins, low DSO, and a reasonable debt-to-equity. Benchmark against industry data (e.g., CFMA). Sureties have favorites — working capital, equity, and the "underbilled" warning — and backlog is a key forward indicator of revenue and health.

Advanced / Pro-Level

Build a one-page financial dashboard reviewed monthly. Understand the EMR's double effect — it raises insurance cost and can disqualify you from bids. Run WIP fade analysis (did estimated margins erode as jobs progressed?). Use ratios to set goals ("raise working capital to lift bonding capacity"). And watch the failure-predictor metrics — declining working capital, rising underbillings, margin fade, and aging AR — because catching them early is the difference between a course-correction and a collapse.

Practice Challenge

Your DSO jumps from 35 to 60 days. What does it mean, and why care? (Answer: you're now taking ~60 days to collect instead of 35 — cash is tied up longer in receivables, straining working capital and cash flow. Rising DSO signals billing/collection problems and can choke a growing contractor; tighten your billing cadence and collections process.)

Takeaway: Track a short dashboard of ratios monthly — working capital and current ratio (liquidity), gross/net margin (profit), DSO and backlog (efficiency), debt-to-equity (leverage), and EMR — and watch the failure-predictors (falling working capital, rising underbillings, margin fade, aging AR) to catch trouble early.

Educational overview — not accounting, tax, or legal advice. Work with a qualified construction CPA for your business.