Finance

The number of months a company can continue operating at its current spending rate before running out of cash. It assumes no new revenue or funding is secured.

The rate at which a company spends its cash reserves, typically measured on a monthly basis. Net monthly cash spent on operations, before positive cash flow.

The total revenue or profit a business expects to earn from a single customer throughout their entire relationship with the company. It projects net profit per customer over the full duration of that relationship.

The percentage of revenue a business retains after subtracting the direct costs of producing its goods or services. It shows the ratio of gross profit to net sales, per revenue dollar.

A financial statement that summarizes the revenues, costs, and expenses incurred during a specific period of time. Also called an income statement, it subtracts total expenses from revenues to measure performance.

The net amount of cash and cash equivalents being transferred into and out of a business during a specific period. It shows the net change in the company's cash position over a given operating interval.

The ongoing administrative and operational costs required to run a business that are not directly tied to producing goods or services. Examples include rent, utilities, and administrative salaries.

A financial metric used to evaluate the efficiency or profitability of an investment relative to its cost. It is the ratio of net profit to investment cost, expressed as a percentage.

The point at which total revenue equals total costs, resulting in neither profit nor loss. It marks the sales volume at which a business recovers all variable and fixed costs.

The total amount of money a business brings in from selling its products or services before any expenses are deducted. It is the total sales volume before any costs are applied.

The direct costs of producing the goods or services sold by a business, including raw materials and direct labor. It covers direct production or acquisition costs during a specific period.

The money a business makes after subtracting the direct costs of producing its products or services. It represents residual earnings after COGS, available to cover all operating expenses.

The actual profit of a business after all operating expenses, interest, taxes, and direct costs are subtracted from total revenue. It deducts COGS, interest, depreciation, and taxes.

A ratio that compares the lifetime value of a customer to the cost of acquiring that customer. It is calculated by dividing LTV by CAC to assess sales and marketing productivity.

The predictable revenue a subscription-based business expects to receive every month. It is calculated by multiplying total paying subscribers by average revenue per user.

The predictable revenue a subscription-based business expects to receive over a full year. It is typically calculated by multiplying monthly recurring revenue by twelve.

The rate at which customers cancel their subscriptions or stop doing business with a company over a specific period. It indicates customer attrition and directly affects MRR and LTV.

A metric that measures the percentage of recurring revenue retained from existing customers over a period, including expansion and downgrades.