Finance Metrics – Page 8

Out of Cash Date is the projected point in time when a company's cash reserves will reach zero, calculated by dividing current cash by monthly net burn rate. Expressed as months of runway remaining, it is a critical planning metric for CEOs and CFOs managing companies that are not yet cash flow positive.

Payment acceptance is the percentage of attempted payments that are successfully authorised and accepted. In credit-card terminology, this is often called the authorization rate. Failed payments — whether declines by the card issuer, routing issues, or declines due to fraud filters — are a major source of lost revenue in online commerce because acceptance rates for card-not-present (online) payments are generally lower than for in-person transactions.

Payment Dispute Rate is the percentage of total successful payments that result in a dispute within the same period. Disputed payments, also called chargebacks, are initiated by the cardholder's bank and typically carry a processing fee for the merchant.

Payment Refund Rate is the percentage of successful payments that are refunded within a given time period. While refunds and chargebacks both result in money being returned to the customer, they are fundamentally different: refunds are voluntary and merchant-initiated, whereas chargebacks are involuntary, initiated by the customer’s bank, and typically incur additional fees and risk penalties.

Payouts are the funds a payment processing platform transfers to your bank account after collecting customer payments on your behalf. The deposited amount reflects gross sales minus processor fees, refunds, and chargebacks, delivered on a schedule you configure.

Payroll Expenses represents the total cost incurred by a business to compensate its employees and independent contractors. This includes direct payments such as salaries, wages, and bonuses, as well as associated costs like employer-paid taxes, health insurance premiums, retirement contributions, and other benefits. This metric is a key indicator of a company’s operational costs and is typically a significant portion of a business’s overall expenses. Understanding Payroll Expenses is crucial for financial planning, budgeting, and evaluating profitability

Payroll to Revenue Ratio, frequently referred to as Salary to Revenue Ratio, is a productivity metric that measures how effective a business is at utilizing its labour costs to produce revenue. As with any ratio, it's always important to understand both the numerator and the denominator and how changes to either will impact the number.

The Price-to-Earnings Ratio is a company valuation metric that compares a stock's current share price to its earnings per share, showing how much investors pay for each dollar of earnings.

Profit per Employee is a measure of Net Income for the past twelve months (LTM) divided by the current number of Full-Time Equivalent employees. Because labour needs differ across sectors, this ratio is often used to compare companies within the same industry.

Propensity to Renew is a measure of the likelihood a customer will renew their contract instead of terminating their engagement with a company, most often captured through a customer survey. It signals revenue risk and potential logo churn.

Purchases is the total amount spent on goods bought from suppliers for the purpose of reselling at a profit. It records procurement spend at the time of purchase, before inventory adjustments or labour costs are applied.

The Quick Ratio measures the ability of your organization to meet any short-term financial obligations with assets that can be quickly converted into cash. It considers the ability for Current Assets, less inventory, to cover Current Liabilities.