Metrics Glossary
Master the Metrics That Matter
196 financial, SaaS, fundraising, and ecommerce terms defined in plain english with formulas and real examples.
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A
Accounting
Accounts Payable (AP)
Money a company owes to vendors and suppliers for goods or services received but not yet paid for.
Accounting
Accounts Payable Turnover
How quickly a company pays its suppliers, indicating cash management practices and supplier relationships.
Accounting
Accounts Receivable (AR)
Money owed to a company by customers who have received goods or services but haven't yet paid.
Accounting
Accounts Receivable Turnover
How efficiently a company collects payments from customers, measured by how many times receivables are collected annually.
Accounting
Accrual Accounting
An accounting method that records revenue when earned and expenses when incurred, regardless of when cash changes hands.
Accounting
Accrued Expenses
Expenses that have been incurred but not yet paid or recorded in the accounts.
Fundraising
Accrued Interest
Interest that accumulates on convertible notes over time, typically converting to additional equity.
SaaS Metrics
Activation Rate
The percentage of new users who complete a key action indicating they've experienced the product's core value.
Revenue Metrics
ACV (Annual Contract Value)
The average annualized revenue per customer contract, normalizing multi-year deals to show yearly value.
Accounting
Amortization
The systematic allocation of an intangible asset's cost over its useful life or legal life.
Fundraising
Anti-Dilution
Protection that adjusts an investor's share price if the company later raises money at a lower valuation.
Ecommerce Metrics
AOV (Average Order Value)
The average dollar amount spent per order, calculated by dividing total revenue by total number of orders.
Revenue Metrics
ARPU (Average Revenue Per User)
The average monthly or annual revenue generated per active user or account, calculated by dividing total revenue by total users.
Revenue Metrics
ARR (Annual Recurring Revenue)
The total value of recurring revenue normalized to a one-year period, calculated by multiplying MRR by 12.
Financial Metrics
Asset Turnover Ratio
A measure of how efficiently a company uses its assets to generate revenue.
B
Accounting
Balance Sheet
A financial snapshot showing what a company owns (assets), owes (liabilities), and the residual value to shareholders (equity).
Revenue Metrics
Billings
The amount invoiced to customers in a period, representing cash that will be collected regardless of revenue recognition timing.
Fundraising
Board of Directors
The governing body responsible for major company decisions, composed of founders, investors, and independent members.
Revenue Metrics
Bookings
The total value of new contracts signed in a period, representing committed future revenue regardless of when it will be recognized.
Unit Economics
Break-Even Point
The point where total revenue equals total costs, meaning the business is neither profitable nor losing money.
Fundraising
Bridge Financing
Short-term funding to extend runway until the next equity round or specific milestone.
Fundraising
Bridge Round
Short-term financing to extend runway until a larger funding round closes, typically from existing investors.
Forecasting
Budget Model
A structured financial plan that forecasts revenue and expenses over a defined period, used to guide spending decisions and track performance.
Unit Economics
Burn Multiple
A capital efficiency metric showing how much cash is burned to generate each dollar of new annual recurring revenue.
Financial Metrics
Burn Rate
The rate at which a company spends its cash reserves, typically measured as net cash spent per month.
C
Unit Economics
CAC (Customer Acquisition Cost)
The total cost of acquiring a new customer, including all marketing and sales expenses divided by the number of new customers acquired.
SaaS Metrics
CAC Payback Period
The number of months required to recover the cost of acquiring a customer through their subscription payments.
Fundraising
Cap Table
A spreadsheet showing who owns what percentage of a company, including all shares, options, and convertible instruments.
Fundraising
Capital Call (Drawdown)
A GP's formal request for LPs to transfer a portion of their committed capital to fund investments or cover expenses.
Cap Table & Equity
Capitalization Table
A document showing company ownership, including all shareholders, share counts, ownership percentages, and security terms.
Fundraising
Carried Interest (Carry)
The share of investment profits that fund managers receive as compensation, typically 20% of gains.
Ecommerce Metrics
Cart Abandonment Rate
The percentage of online shoppers who add items to their cart but leave without completing the purchase.
Accounting
Cash Basis Accounting
An accounting method that records transactions only when cash is received or paid out.
Financial Metrics
Cash Conversion Cycle (CCC)
The number of days between paying for inventory and collecting cash from customers.
Financial Metrics
Cash Flow
The movement of money into and out of a business, showing actual liquidity rather than accounting profit.
Financial Metrics
Cash Ratio
The most conservative liquidity measure, comparing only cash and equivalents to current liabilities.
Financial Metrics
Cash Runway
The number of months a startup can operate before running out of cash, calculated by dividing current cash by monthly net burn rate.
Fundraising
Cash-on-Cash Return
The ratio of annual cash income to total cash invested, measuring yield on actual dollars deployed.
Accounting
Chart of Accounts
A categorized list of all accounts used to record financial transactions in the general ledger.
SaaS Metrics
Churn Rate
The percentage of customers or revenue lost over a specific period, measuring how quickly you're losing business.
Fundraising
Clawback Provision
A clause requiring GPs to return excess carried interest if later fund performance doesn't justify early distributions.
Cap Table & Equity
Cliff (Vesting)
A waiting period before any equity vests, typically one year, protecting companies from early departures.
Unit Economics
COGS (Cost of Goods Sold)
The direct costs of producing and delivering your product or service, subtracted from revenue to calculate gross profit.
Forecasting
Cohort Analysis
Grouping users by signup date and tracking their behavior over time to reveal trends and product improvements.
Cap Table & Equity
Common Stock
Basic ownership shares with voting rights but no special preferences, typically held by founders and employees.
Fundraising
Comparable Company Analysis
A valuation method that determines company value by comparing financial multiples to similar public or private companies.
Revenue Metrics
Contraction Revenue
Revenue lost when existing customers downgrade their plans or reduce usage, distinct from churn where customers leave entirely.
Unit Economics
Contribution Margin
The amount each sale contributes toward fixed costs and profit after subtracting variable costs directly tied to that sale.
Fundraising
Conversion Discount
A percentage reduction in share price that convertible investors receive when converting to equity.
Ecommerce Metrics
Conversion Rate
The percentage of visitors who complete a desired action, such as making a purchase or signing up for a service.
Fundraising
Convertible Note
A debt instrument that converts to equity in a future funding round, featuring interest accrual and a maturity date.
Ecommerce Metrics
Cost Per Acquisition (CPA)
The marketing cost to acquire one new customer, measuring acquisition efficiency by channel or campaign.
Financial Metrics
Current Ratio
A liquidity ratio measuring ability to pay short-term obligations with current assets.
Financial Metrics
Customer Concentration
The degree to which revenue depends on a small number of large customers.
SaaS Metrics
Customer Health Score
A composite metric combining usage, engagement, and sentiment signals to predict customer renewal likelihood.
Ecommerce Metrics
Customer Retention Rate
The percentage of customers who continue doing business with you over a specific period, measuring loyalty and satisfaction.
D
Growth Metrics
DAU/MAU Ratio
The ratio of daily active users to monthly active users, measuring how frequently users engage with a product.
Ecommerce Metrics
Days Inventory Outstanding (DIO)
The average number of days a company holds inventory before selling it.
Financial Metrics
Days Payable Outstanding (DPO)
The average number of days a company takes to pay its suppliers and vendors.
Financial Metrics
Days Sales Outstanding (DSO)
The average number of days it takes to collect payment after a sale is made.
Financial Metrics
Debt Service Coverage Ratio (DSCR)
A measure of available cash flow to pay current debt obligations, including both principal and interest.
Financial Metrics
Debt-to-Equity Ratio
A measure of financial leverage comparing total debt to shareholders' equity.
Revenue Metrics
Deferred Revenue
Money received from customers for services not yet delivered, recorded as a liability until the service is provided and revenue can be recognized.
Accounting
Depreciation
The systematic allocation of a tangible asset's cost over its useful life.
Fundraising
Dilution
The reduction in ownership percentage when new shares are issued, occurring during funding rounds and equity grants.
Fundraising
Discount Rate (SAFE/Note)
A percentage reduction on the next round's share price for SAFE or convertible note holders, rewarding early risk.
Fundraising
Discounted Cash Flow (DCF)
A valuation method that estimates business value by projecting future cash flows and discounting them to present value.
Fundraising
Distribution Waterfall
The structured sequence determining how fund profits are split between LPs and GPs, including return of capital, preferred return, catch-up, and carried interest.
Cap Table & Equity
Double Trigger Acceleration
Vesting acceleration that requires both a company acquisition AND termination of employment to trigger.
Fundraising
Down Round
A funding round where the company raises money at a lower valuation than its previous round.
Fundraising
DPI (Distributions to Paid-In)
A fund performance metric showing actual cash returned to investors relative to invested capital.
Cap Table & Equity
Drag-Along Rights
A provision allowing majority shareholders to force minority shareholders to join in the sale of a company.
Fundraising
Dry Powder
Committed but uncalled capital that a venture fund has available to deploy into new or existing investments.
Fundraising
Due Diligence
The comprehensive investigation of a company by potential investors or acquirers before completing a transaction.
E
Financial Metrics
EBIT (Earnings Before Interest & Taxes)
Operating profit before financing costs and taxes are deducted, showing how much money the core business generates.
Accounting
EBITDA
Earnings Before Interest, Taxes, Depreciation, and Amortization, a measure of operational profitability excluding financing and accounting effects.
Unit Economics
Efficiency Score
The ratio of net new ARR to sales and marketing spend, measuring how efficiently growth investment converts to revenue.
Cap Table & Equity
Equity Dilution
The reduction in existing shareholders' ownership percentage when new shares are issued.
Cap Table & Equity
Exercise Price (Strike Price)
The price an option holder pays to convert options into shares, set at fair market value when granted.
Fundraising
Exit Multiple
The ratio of exit proceeds to original investment, showing how many times the invested capital was returned.
Revenue Metrics
Expansion Revenue
Additional revenue generated from existing customers through upsells, cross-sells, and increased usage beyond their original purchase.
F
Financial Metrics
FCF Margin
Free cash flow as a percentage of revenue, measuring how efficiently a company converts revenue into actual cash.
Financial Metrics
FCF Yield
Free cash flow divided by market capitalization or enterprise value, measuring how much cash a company generates relative to its valuation.
SaaS Metrics
Feature Adoption Rate
The percentage of users actively using a specific feature, measuring whether features deliver value.
Accounting
Fixed Asset Turnover
How efficiently a company uses its fixed assets (property, equipment) to generate revenue.
Financial Metrics
Free Cash Flow (FCF)
The cash remaining after operating expenses and capital expenditures, available for dividends, debt repayment, or reinvestment.
SaaS Metrics
Freemium Conversion Rate
The percentage of free users who upgrade to paid plans, measuring the effectiveness of a freemium model.
Cap Table & Equity
Fully Diluted Shares
The total number of shares that would exist if every option, warrant, and convertible instrument were exercised.
Fundraising
Fund of Funds
An investment fund that invests in other venture capital or private equity funds rather than directly in companies.
Fundraising
Fund Vintage
The year a venture fund began investing, used to compare performance across different market cycles.
G
Accounting
GAAP (Generally Accepted Accounting Principles)
The standardized set of accounting rules and conventions used to prepare financial statements in the United States.
Accounting
General Ledger
The master record containing all financial transactions organized by account.
Fundraising
General Partner (GP)
The fund managers who make investment decisions, manage portfolio companies, and have unlimited liability.
Accounting
Goodwill
An intangible asset representing the excess paid to acquire a business over the fair value of its identifiable assets.
Financial Metrics
Gross Burn vs Net Burn
Gross burn is total monthly spending; net burn is spending minus revenue, showing actual monthly cash consumption.
Unit Economics
Gross Margin
The percentage of revenue remaining after subtracting direct costs of delivering the product, before operating expenses.
Ecommerce Metrics
Gross Merchandise Value (GMV)
The total value of goods sold through a platform before fees, returns, or cancellations are deducted.
Accounting
Gross Profit Margin
The percentage of revenue remaining after subtracting the direct costs of producing goods or services sold.
Revenue Metrics
GRR (Gross Revenue Retention)
The percentage of recurring revenue retained from existing customers, excluding expansion revenue and only accounting for churn and contraction.
H
I
Accounting
Income Statement (P&L)
A financial statement showing revenue, expenses, and profit over a period, revealing whether the business made or lost money.
Fundraising
Information Rights
Investor rights to receive regular financial and operational updates from the company.
Financial Metrics
Interest Coverage Ratio
A measure of how easily a company can pay interest expenses on outstanding debt.
Ecommerce Metrics
Inventory Turnover
How many times a company sells and replaces its inventory over a period, measuring inventory efficiency.
Accounting
Inventory Turnover Ratio
How many times a company sells and replaces its inventory during a period, measuring inventory management efficiency.
Fundraising
IRR (Internal Rate of Return)
The annualized return rate that makes the net present value of all cash flows equal zero.
J
L
Growth Metrics
Lead Velocity Rate (LVR)
The month-over-month percentage growth in qualified leads, serving as a leading indicator of future revenue.
Fundraising
Limited Partner (LP)
Investors who provide capital to venture funds but don't participate in investment decisions.
Fundraising
Liquidation Preference
The right of preferred shareholders to receive their investment back before common shareholders in a sale or liquidation.
SaaS Metrics
Logo Churn vs Revenue Churn
Logo churn counts customers lost; revenue churn counts dollars lost. They reveal different aspects of retention health.
Unit Economics
LTV (Lifetime Value)
The total revenue a business expects to earn from a customer over the entire duration of their relationship.
SaaS Metrics
LTV:CAC Ratio
The ratio comparing customer lifetime value to acquisition cost, indicating whether your unit economics support sustainable growth.
M
SaaS Metrics
Magic Number
A sales efficiency metric measuring how much new ARR is generated for each dollar spent on sales and marketing.
Fundraising
Management Fee
The annual fee VC funds charge to cover operating expenses, typically 2% of committed capital.
Fundraising
Mark to Market
Revaluing an asset to reflect its current market price rather than its original purchase price or book value.
Fundraising
Maturity Date
The deadline by which a convertible note must be repaid or converted to equity.
Fundraising
MOIC (Multiple on Invested Capital)
Total value returned divided by total capital invested, expressing returns as a simple multiple.
Growth Metrics
Monthly Active Users (MAU)
The count of unique users who engaged with a product at least once in the past 30 days.
Financial Metrics
Monthly Burn Rate
The amount of cash a company spends each month net of revenue, determining how long capital will last.
Fundraising
Most Favored Nation (MFN)
A provision guaranteeing an investor will receive terms at least as favorable as any subsequent investor receives.
Revenue Metrics
MRR (Monthly Recurring Revenue)
The predictable revenue a subscription business expects to earn each month from active subscriptions.
N
SaaS Metrics
Net Dollar Retention (NDR)
The percentage of recurring revenue retained from existing customers over a year, including expansion and accounting for churn.
Revenue Metrics
Net New ARR
The change in Annual Recurring Revenue over a period, accounting for new customers, expansion, contraction, and churn.
Financial Metrics
Net Profit Margin
The percentage of revenue remaining as profit after all expenses, taxes, and interest are paid.
Financial Metrics
Net Working Capital
The difference between current assets and current liabilities, measuring operational liquidity.
Growth Metrics
North Star Metric
The single metric that best captures the core value a product delivers to customers, aligning company focus.
SaaS Metrics
NPS (Net Promoter Score)
A customer loyalty metric measuring willingness to recommend, calculated as the percentage of promoters minus detractors.
Revenue Metrics
NRR (Net Revenue Retention)
The percentage of recurring revenue retained from existing customers over a period, including expansion, contraction, and churn.
O
Financial Metrics
Operating Cycle
The total time from purchasing inventory to collecting cash from customers.
Accounting
Operating Margin
The percentage of revenue remaining after all operating costs, showing how efficiently a business converts revenue to operating profit.
Accounting
Operating Profit Margin
The percentage of revenue remaining after deducting operating expenses, showing profitability from core business operations.
Cap Table & Equity
Option Pool
A percentage of company equity reserved for future employee stock option grants, typically 10-20% of fully diluted shares.
P
Cap Table & Equity
Participating Preferred
Preferred stock that receives its liquidation preference plus participates pro-rata in remaining proceeds with common shareholders.
Fundraising
Pay-to-Play Provision
A requirement that investors participate in future funding rounds or face conversion of preferred stock to common stock.
Unit Economics
Payback Period
The time required to recover customer acquisition cost from the gross margin a customer generates.
Growth Metrics
Pipeline Coverage
The ratio of total sales pipeline value to revenue target, indicating whether there are enough opportunities to hit quota.
Fundraising
Post-Money Valuation
A company's valuation immediately after receiving new investment, equal to pre-money valuation plus new capital raised.
Fundraising
Pre-Money Valuation
A company's valuation before new investment is added, serving as the negotiation anchor in any fundraise.
Cap Table & Equity
Preferred Stock
A class of stock with special rights including liquidation preference and anti-dilution protection, typically held by investors.
Accounting
Prepaid Expenses
Payments made in advance for goods or services to be received in future periods.
Cap Table & Equity
Pro Rata Rights
The right for existing investors to participate in future funding rounds to maintain their ownership percentage.
SaaS Metrics
Product Qualified Lead (PQL)
A user who demonstrates buying intent through product usage, predicting higher conversion likelihood than marketing leads.
Financial Metrics
Profit Per Employee
Net income divided by total employees, measuring how efficiently your team generates profit.
Fundraising
Protective Provisions
Veto rights given to preferred shareholders over specific major company decisions.
Q
Fundraising
Qualified Financing
The minimum raise amount that triggers automatic conversion of convertible notes or SAFEs.
Financial Metrics
Quick Ratio (Acid Test)
A stringent liquidity measure excluding inventory, showing ability to meet obligations with most liquid assets.
SaaS Metrics
Quick Ratio (SaaS)
A growth efficiency metric comparing revenue added (new + expansion) to revenue lost (churn + contraction), showing net growth quality.
R
Financial Metrics
Receivables Turnover
How many times per year a company collects its average accounts receivable balance.
Ecommerce Metrics
Repeat Purchase Rate
The percentage of customers who make more than one purchase, indicating customer satisfaction and loyalty.
Financial Metrics
Return on Assets (ROA)
A measure of how efficiently a company uses its assets to generate profit.
Financial Metrics
Return on Equity (ROE)
A measure of how efficiently a company generates profit from shareholders' equity investment.
Financial Metrics
Return on Invested Capital (ROIC)
A measure of how efficiently a company uses all invested capital (debt and equity) to generate profits.
Financial Metrics
Return on Investment (ROI)
The percentage gain or loss on an investment relative to its cost, measuring the efficiency of capital deployment.
Ecommerce Metrics
Return Rate
The percentage of orders returned by customers, measuring product satisfaction and description accuracy.
Financial Metrics
Revenue Concentration Risk
The vulnerability created when a large percentage of revenue comes from a small number of customers or products.
Forecasting
Revenue Forecast
Projecting future revenue based on current trends, pipeline, churn, and expansion assumptions.
Financial Metrics
Revenue Per Employee
Total revenue divided by headcount, measuring how efficiently your team generates top-line growth.
Accounting
Revenue Recognition
The accounting principle determining when revenue is recorded, based on when it's earned rather than when cash is received.
Forecasting
Revenue Run Rate
An annualized projection of current revenue, calculated by multiplying recent monthly or quarterly revenue by 12 or 4 respectively.
Fundraising
Revenue-Based Financing
Non-dilutive capital where repayment is a percentage of monthly revenue until a predetermined cap is reached.
Cap Table & Equity
Right of First Refusal (ROFR)
The right to match any offer a shareholder receives before they can sell to a third party.
Ecommerce Metrics
ROAS (Return on Ad Spend)
The revenue generated for every dollar spent on advertising, measuring the efficiency of paid marketing campaigns.
SaaS Metrics
Rule of 40
A benchmark stating that a SaaS company's growth rate plus profit margin should equal or exceed 40% to be considered healthy.
Financial Metrics
Runway
The amount of time a company can continue operating at its current burn rate before running out of cash.
Fundraising
RVPI (Residual Value to Paid-In)
The unrealized, paper value of a fund's remaining portfolio relative to invested capital.
S
Fundraising
SAFE (Simple Agreement for Future Equity)
An investment agreement that converts to equity in a future funding round, featuring a valuation cap and/or discount without debt terms.
Growth Metrics
Sales Cycle Length
The average time from first prospect contact to deal close, measuring how long the sales process takes.
Forecasting
Scenario Planning
Creating multiple financial models with different assumptions to prepare for a range of possible futures.
Revenue Metrics
Seat Expansion
Growth in the number of paid users within existing customer accounts, a key driver of expansion revenue.
Fundraising
Secondary Market (Private Equity)
A marketplace where existing investors sell their fund stakes or company shares to new buyers before an IPO or fund liquidation.
Cap Table & Equity
Secondary Sale
A transaction where existing shareholders sell their shares to another buyer rather than the company issuing new shares.
Ecommerce Metrics
Sell-Through Rate
The percentage of inventory sold compared to what was received, measuring how quickly products move.
Financial Metrics
Seller's Discretionary Earnings (SDE)
The total financial benefit a single owner-operator extracts from a business, used to value small businesses and startups.
Growth Metrics
Session Duration
The average time users spend in your product per visit, measuring engagement depth.
Financial Metrics
Solvency Ratio
A measure of a company's ability to meet long-term obligations and continue operating indefinitely.
Fundraising
SPV (Special Purpose Vehicle)
A legal entity created for a single investment, allowing multiple investors to pool capital into one deal.
Growth Metrics
Stickiness (DAU/MAU)
The ratio of daily to monthly active users, measuring how often users return and engage with your product.
T
Cap Table & Equity
Tag-Along Rights
A provision allowing minority shareholders to join a sale if majority shareholders sell their stake.
Revenue Metrics
TCV (Total Contract Value)
The total revenue value of a customer contract over its full term, including all recurring and one-time fees.
Fundraising
Term Sheet
A non-binding document outlining the key terms of a proposed investment before final legal documents are drafted.
SaaS Metrics
Time to Value (TTV)
The duration between a user signing up and experiencing meaningful value from the product for the first time.
Accounting
Trial Balance
A report listing all account balances to verify that total debits equal total credits.
Fundraising
TVPI (Total Value to Paid-In)
A fund performance metric showing total value (realized + unrealized) relative to invested capital.
U
V
Fundraising
Valuation Cap
The maximum valuation at which a SAFE or convertible note converts to equity, protecting early investors from excessive dilution.
Forecasting
Variance Analysis
Comparing actual results to budget and investigating the reasons for differences to improve future forecasting.
Fundraising
Venture Debt
Debt financing for venture-backed startups, typically used to extend runway between equity rounds without additional dilution.
Cap Table & Equity
Vesting Schedule
The timeline over which equity ownership is earned, typically 4 years with a 1-year cliff before any shares vest.
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Z
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