Revenue Split. Split this between recurring and non-recurring. Recurring revenue is perceived as more valuable than non-recurring revenue due to its predictability and stickiness.. The higher the % of recurring revenue, the higher the valuation multiple. Gross Margin (GM). = Revenue - Cost of Goods Sold / Revenue. GM tells you how much revenue you get to keep after paying for the production on your product or service. The higher the GM, the more efficient your production (better processes, cheaper supply, etc.). Net Profit Margin. = Net Income / Revenue. This indicates how much revenue is left after ALL costs and expenses have been paid.. The higher the NPM, the more profitable your business. Lifetime Value (LTV). = Revenue Since Inception / # of customers. LTV measure how much each customer contributes to your business. LTV is driven by.... Profitability per transaction. Number of transactions per customer. Increase both to increase LTV. Cost of Customer Acquisition (CAC). = Marketing Costs + Sales Costs / # of Customer Acquired. Usually compared against LTV to determine if how much it costs to acquire a customer is worth the value expected from said customer. Ideally you should have an LTV:CAC > 3. Days Sales Outstanding (DSO). = Account Receivables / Sales x 365 Days. Measures how quickly your customer pays their bills. If DSO is meaningfully higher than credit terms (days), you have a collections issue. Days Payable Outstanding (DPO). = Account Payables / COGS x 365 Days. Measures how quickly you pay your bills. Increases could signal cash flow constraints within your business. Ideally, DSO < DPO. This means you are getting paid BEFORE paying your suppliers. Cash Burn Rate. = Company Cash / Monthly Expenses. Measures how quickly you are burning through your cash reserves. Especially important in the early stages of a business or when there is a significant disruption in the market (COVID, Recession). Current Ratio. = Current Assets / Current Liabilites. Measures whether you have the ability to meet your short-term obligations (ie pay your suppliers). If current ratio is below 1, it could be a sign that your business is in financial difficulty. Gross Revenue Churn. = Revenue Lost for the period / Total Revenue at the start of the period. Measures percentage of revenue lost during a period. Significant increases are early warning signals of problems (ie customer distress, increasing competition, etc.)