How does it work?
For periods which are less than 1 year in length, when calculating certain KPIs (ie. ROCE, ROE, Activity Ratio etc...) it is necessary to annualise results for values like EBIT or Revenue. This is to ensure that annualised result for these values are expressed properly as a percentage of balance sheet values.
In an example for the month of October, which has 31 days:
October Revenue is $96,569.
Annualised revenue = ($96,569 / 31) * 365 = $1,137,022
If the result is slightly different than expected using this formula, then this will likely be due to the precision and rounding. For instance, the revenue amount may actually include cents (e.g. $96,569.47).
Can I create my own annualised KPIs?
You're able to create your own annualised KPIs within Fathom, by using the Formula builder. This enables you to create your own formulas and ratios in Fathom.
To do so, proceed to 'Step 4 - KPIs' in the company settings, and click 'Create a KPI > Formula KPI'.
The popup modal will allow you to fill in details for your KPI. Once filled out, proceed to the next step - the Formula Builder. Here you will be able to build out your Annualised KPI formula.
For example, to create annualised revenue:
Annualised Revenue = Revenue / Period Length x 365
'Period Length' is a default variable that you can include in your formula. Simply search for your variables using the search bar in the middle of the screen.
