Category: Glossary

ARR, or Annual Recurring Revenue, is a key financial metric used by subscription-based businesses to measure the predictable, recurring revenue they generate on an annual basis. It provides a clear view of the company’s financial health over a longer period, making it an essential tool for forecasting and planning. What is ARR? ARR represents the…

MRR, or Monthly Recurring Revenue, is a metric used by subscription-based businesses to measure the predictable, recurring revenue they generate each month. It helps businesses track their financial health and growth by focusing on the steady income they can count on from their customers. What is MRR? MRR represents the total revenue a company expects…

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It shows how much money a company makes from its regular business activities, like selling products or services, before paying for interest on loans, taxes, and accounting for the reduction in value of its assets (depreciation and amortization). It focuses on the company’s ability to…

EBIT, or Earnings Before Interest and Taxes, is a financial term that shows how much profit a company makes from its main business activities before it pays interest on debts or taxes. It’s also called Operating Income or Operating Profit. How to Calculate EBIT Formula for EBIT: EBIT = Revenue − Cost of Goods Sold…

Total Profit, also known as Net Profit or Net Income, is the amount of money a company keeps after subtracting all of its expenses from its total revenue. It’s a key measure of a company’s financial health because it shows how much money the company actually makes after covering all its costs. How to Calculate…

Cash Flow is about tracking the money that comes into and goes out of a business. It shows how much cash a company has and helps ensure there’s enough to pay bills and invest in growth. Types of Cash Flow Operating Cash Flow: This is the cash a company earns from its main activities, like…

Expansion Revenue is the extra money a company makes from its existing customers as they spend more on its products or services. Unlike new revenue from new customers, expansion revenue comes from getting current customers to buy more or upgrade what they already have. What Expansion Revenue Includes: Upselling: When current customers buy a more…

Gross Revenue is the total amount of money a company earns from its business activities before any expenses are deducted. It includes all income from sales of goods or services, as well as other sources of revenue, like interest or rental income. It represents the company’s top-line sales figure and is often the starting point…

In finance, margin is a way to understand how much profit a company makes compared to its sales or costs. It is usually shown as a percentage, which helps to see how well a company is doing financially. Common types of margins are: Gross Profit Margin: What It Is: This margin shows how much money…

Gross Profit is a key financial metric that measures a company’s profitability by calculating the difference between its total revenue and the cost of goods sold (COGS). It indicates how efficiently a company is producing and selling its products or services. Gross profit is not exactly the same as total profit. They are related but…