Key financial metrics for a startup

Revenue Metrics

1. Monthly Recurring Revenue (MRR): Regular monthly income from subscriptions or recurring payments. Helps forecast future revenue.
2. Annual Recurring Revenue (ARR): Annualized version of MRR. Useful for long-term growth analysis.
3. Revenue Growth Rate: Percentage change in revenue over a given period (monthly, quarterly, annually).

Profitability Metrics

1. Gross Margin: (Revenue?CostofGoodsSold)÷Revenue(Revenue - Cost of Goods Sold) ÷ Revenue(Revenue?CostofGoodsSold)÷Revenue Indicates how efficiently the startup generates profit from core operations.
2. Net Profit Margin: (NetProfit÷Revenue)×100(Net Profit ÷ Revenue) × 100(NetProfit÷Revenue)×100 Reflects the overall profitability after all expenses.
3. Burn Rate: The rate at which a startup spends capital. Net Burn Rate: Monthly cash outflow after accounting for revenue. Gross Burn Rate: Total monthly cash outflow.
4. Runway: CashBalance÷BurnRateCash Balance ÷ Burn RateCashBalance÷BurnRate Indicates how many months the startup can operate without additional funding.

Customer Metrics

1. Customer Acquisition Cost (CAC): Total Sales & Marketing Expenses ÷ New Customers Acquired Measures the cost to acquire each customer.
2. Customer Lifetime Value (CLTV or LTV): AverageRevenuePerUser(ARPU)×AverageCustomerLifetimeAverage Revenue Per User (ARPU) × Average Customer LifetimeAverageRevenuePerUser(ARPU)×AverageCustomerLifetime Reflects the total revenue expected from a customer over their relationship with the company.
3. LTV to CAC Ratio: A ratio of customer lifetime value to acquisition cost. Ideal ratio: 3:1, meaning LTV should be three times CAC.
4. Churn Rate: (CustomersLostDuringaPeriod÷TotalCustomersatStartofPeriod)×100(Customers Lost During a Period ÷ Total Customers at Start of Period) × 100(CustomersLostDuringaPeriod÷TotalCustomersatStartofPeriod)×100 Indicates how well the company retains customers.

Operational Metrics

1. Revenue Per Employee: Revenue÷NumberofEmployeesRevenue ÷ Number of EmployeesRevenue÷NumberofEmployees Measures efficiency and scalability.
2. ARPU (Average Revenue Per User): TotalRevenue÷TotalCustomersTotal Revenue ÷ Total CustomersTotalRevenue÷TotalCustomers Indicates revenue per customer.

Investment Metrics

1. Valuation: The startup’s estimated worth, often based on fundraising rounds or market comparables.
2. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): A measure of core operational profitability.
3. Return on Investment (ROI): (NetProfitfromInvestment÷InvestmentCost)×100(Net Profit from Investment ÷ Investment Cost) × 100(NetProfitfromInvestment÷InvestmentCost)×100 Evaluates profitability for investors and founders.

Growth & Market Metrics

1. Market Penetration: Measures the percentage of target market captured.
2. Growth Rate: Average percentage increase in key performance indicators like revenue, users, or product adoption.
3. Retention Rate: Percentage of customers retained over a specific time period. 1?ChurnRate1 - Churn Rate1?ChurnRate
4. Activation Rate: Percentage of new users/customers who take a key action (e.g., making their first purchase, subscribing).

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