Performance Metrics for Start Ups

If you run a tech startup, we bet you understand the importance of data and a constant monitoring of your performance across finance and operations with the right metrics.

While working with start-ups, these are the few metrics we use to evaluate financial performance, efficiency in operations and other essentials which investors would love to see during the next investment round.

Here is a quick summary of a few such numbers that you must track as part of your Weekly and Monthly MIS.

Profitability Ratios
Gross Margin	Net Sales - Cost of Goods Sold (COGS)
Operating Margin	Net Sales - COGS - All other expenses excluding interest and taxes = Earnings Before Interest & Taxes (EBIT)
EBITDA Margin	Earnings Before Interest, Tax, Depreciation & Amortization (EBITDA)
Net Profit Margin	EBIT - Interest - Taxes = Profit After Tax (PAT) as a percentage of Revenue
Operating Cash Flow Margin	Net Income + Depreciation + Change in Working Capital
Return on Equity	Net Income / Shareholder's Equity
Return on Assets	Net Income / Total Assets
Working Capital Ratios
Working Capital	Current Assets (incl. Stocks, Debtors, Bank) - Current Liabilities (incl. Payables)
Current Ratio	Current Assets / Current Liabilities
Cash Ratio	Cash & Cash Equivalents / Current Liabilities
Quick Ratio	(Current Assets - Inventory) / Current Liabilities
Efficiency Ratios
Receivable Turnover Ratio	Net Sales / Avg. Debtors [where Avg. Debtors means (Opening Debtors + Closing Debtors)/2]
Asset Turnover Ratio	Net Sales / Total Assets
Fixed Assets Turnover Ratio	Net Sales / Total Fixed Assets
Inventory Ratios
Inventory	Raw Material + Work in Progress + Finished Goods
Inventory Turnover Ratio	Cost of Goods Sold / Avg. Inventory [where Avg. Inventory means (Opening Stock + Closing Stock)/2]
Days Inventory Outstanding	365 / Inventory Turnover Ratio
Cost of Goods Sold	Opening Inventory + Purchases + Direct Costs - Closing Inventory
Carrying Cost	Rent for Warehouse Space + Interest on Working Capital blocked on Unsold Inventory
Economic Order Quantity	√[(2 x Order Cost per Order x Annual Demand) / Annual Carrying Cost per unit]
Safety Stock	(Max Daily Usage x Max Lead Time in days) - (Avg. Daily Usage - Avg. Lead Time in days)
Reorder Level	Lead Time Demand + Safety Stock
Inventory Ageing	Value and Category of Items lying unsold based on length of time
Financial Leverage Ratios
Debt to Equity Ratio	Total Debt / Total Assets
Equity Multiplier	Total Assets / Total Total Equity
Interest Earned Ratio	EBIT / Interest Expenses
Cash Coverage Ratio	EBITDA / Interest Expense
Altman Z-Score	Read here
E-Commerce Metrics
Average Order Value (AOV)	Total Revenue from Orders / No. of Orders placed in a period
Avg. Revenue per User	Revenue / No. of Active Users per Month
Avg. Revenue per Visitor	Revenue / No. of Visitors
Revenue by Product Line	Revenues for each line of product or services
Sales Conversion Rate	Total No. of Sales / Total No. of Sessions on the Store
Cost per Visitor	Total Marketing Costs / Total Visitors
Contribution Margin per Order/Customer	(Revenue - Direct Variable Costs) / No. of Orders
Contribution Margin After Marketing (CMAM)	(Revenue - Direct Variable Costs - Marketing Expense) / No. of Orders
Refund & Return Rate	Sales Return & Refunds / Total Sales
Cost of Returns	Direct Costs incurred on Sales Returns
Monthly Unique Visitors (MUV)	Sum of all visitors from all channels on a website or app in a month
Customer Conversion Rate	No. of Signups per Month / MUV per Month
Shopping Cart Abandonment Rate	No. of People Leaving with Unpurchased Items in Cart / Total Users Adding to Cart
Checkout Abandonment Rate	No. of People Leaving During Checkout without Purchase
Customer Acquisition Cost (CAC)	Marketing Cost / No. of New Customers
Conversion Rate	Net Sales / Avg. DAU or MAU
Lifetime Value (LTV)	CMAM / Churn Rate
LTV / CAC Ratio	(CMAM / Churn Rate) / (Marketing Expense / No. of New Customers)
Payback Period	CAC / CMAM
Customer Retention Rate	Renewing Customers / Total Old Customers
Repeat Customer Rate	Customers Making Multiple Purchases / Total Customers
Cost & Revenue per Campaign	Revenues and Costs attributable to a particular Marketing Campaign
Other Tech Startup Metrics
Daily/Monthly Active Users	Avg. No. of Users per Day (DAU) or per Month (MAU)
Bounce Rate	No. of Visitors who went back inactive / No. of Visitors
Monthly Recurring Revenue (MRR)	Sum of all revenues that automatically renews on a monthly basis
Annualized Run Rate	MRR x 12
Annually Recurring Revenue	(Annual Subscription Price x No. of Subscribers x Renewal Rate) adjusted for growth
Revenue Multiples	No. of Orders x Avg. Price per Order x New Subscribers
Growth Multiples	Avg. Daily New Subscribers x Avg. Daily Revenues
Revenue per Employee	Net Revenue / Avg. No. of Employees
Churn Rate	No. of Lost Customers / Total Customers
Burn Rate	Avg. Amount of Cash lost per Month
Viral Coefficient	No. of Existing Customers x No. of Invitations sent per Customer x Conversion Rate / No. of Existing Customers
Impressions	No. of Times your Ad is presented to someone
Reach	Total No. of followers or subscribers
Engagement	Reach / Impressions
Click Through Rate (CTR)	No. of Subscribers clicking on the Content sent via Email or otherwise
Organic Acquisition Traffic	Customers Acquired per period without paying for advertisement