Returns for service industry

Yes, difficult to measure returns as a percentage of capital because non-current assets can be very low. However, if capital is very low then there is, of course, little point worrying about how it is used.

The ‘normal’ measures of performance such as:

GP%
NP%
Overheads/sales
Current ratios
Sales growth
etc can all be used

However, comprehensive measurement of performance may need specially constructed measures that relate to the business being assessed. For example:

An accountancy tutorial business could be interested in pass rates and tutor effectiveness/popularity

A law practice could be interested in: fees/staff member, fees/partner, cases won/lost, new client growth, non-billed time

An architectural practice could be interested in fees/staff member, fees/partner, % projects coming in on time and to budget, tenders won/tenders entered.

There are no general rules as it depends on the business. Try to think of yourself as the business owner and then think what you would be interested in measuring that could give you some measures about how your business was doing.