Business calculator glossary: metrics, formulas & concepts

A/B test significance is a statistical evaluation determining whether the observed performance difference between two variants is genuine or likely due to random chance.

Accounts Receivable Days calculates DSO, AR aging metrics, and cash improvement scenarios for receivables.

AI Automation ROI estimates ROI of an AI or automation tool: hours saved vs subscription and implementation cost, with payback period and NPV.

The break-even point is the production or sales volume at which total revenue equals total operational and fixed expenses with zero net profit.

Burn rate is the pace at which a company spends its venture capital or cash reserves before generating positive operating cash flow.

Working days that exclude weekends and public holidays. Used for calculating delivery times, project timelines, and contractual deadlines.

Business valuation determines the economic value of an operating company using discounted cash flow (DCF), EBITDA earnings multiples, revenue multiples, or net asset market value methods.

Buy vs Lease Equipment compares buying vs leasing equipment with NPV analysis and cash flow projections.

The total cost of acquiring a new customer, including marketing, advertising, and sales expenses divided by the number of new customers gained.

The number of months required to recover the cost of acquiring a customer from that customer's gross margin contributions. A shorter payback period indicates more efficient growth capital deployment.

Turn headcount, shifts, and hours into weekly labor capacity, utilization %, and headroom.

Cash Conversion Cycle calculates cash conversion cycle (CCC) from days inventory outstanding, days sales outstanding, and days payable outstanding.

Catering Cost Per Person calculates catering cost per person including food, beverages, staff, and venue. Get a recommended client quote with 35% caterer markup.

COGS calculates cost of goods sold (COGS) from beginning inventory, purchases, and ending inventory, plus gross profit, gross margin, and inventory turnover.

Content Marketing ROI calculates content marketing ROI, organic traffic value, lead attribution, and ROI vs. paid PPC spend.

Contractor vs Employee compares 1099 contractor vs W-2 employee costs.

The revenue remaining after subtracting variable costs. Contribution margin per unit = Selling Price − Variable Cost. Used to determine how many units must be sold to cover fixed costs.

Contribution Margin calculates contribution margin per unit and ratio, then find the break-even volume and units needed to hit a profit target.

Conversion Rate calculates and optimize website conversion rates.

Cost per hire measures the average recruiting cost required to fill one position, including internal recruiting time, agency fees, job boards, interviews, and assessments.

The cost of 1,000 advertising impressions. A standard metric in digital advertising used to compare the efficiency of different ad placements and campaigns.

The Current Ratio is a liquidity metric evaluating whether a business possesses sufficient short-term assets to pay obligations due within one operating year.

The total net profit expected from a customer over the entire relationship. Calculated as average purchase value × purchase frequency × customer lifespan. Guides decisions about how much to spend acquiring customers.

Customer Retention Rate calculates customer retention rate, churn rate, and the revenue impact of improving retention.

Debt to Equity Ratio calculates debt-to-equity ratio from total liabilities and equity, with interpretation and related leverage ratios.

The % change in EPS for a 1% change in EBIT, from EBIT and interest expense.

The % change in EBIT for a 1% change in sales, from contribution margin and EBIT — or from sales/EBIT deltas.

Delivery driver earnings determine true net hourly income for food and package delivery couriers by subtracting mileage costs, fuel, vehicle wear, and self-employment tax from gross app earnings.

Depreciation calculates asset depreciation with straight-line, declining-balance, and sum-of-years-digits methods, with a full year-by-year schedule.

The percentage reduction applied to the original price of a product or service. Can be stacked (multiple sequential discounts) which compounds differently than a single equivalent discount.

Break down return on equity (ROE) into net profit margin, asset turnover, and financial leverage using the DuPont analysis (3-step and 5-step).

EBITDA calculates EBITDA and the EBITDA margin from net income (or revenue) by adding back interest, taxes, depreciation, and amortization.

Economic Order Quantity determines order quantity that minimizes total inventory cost, plus orders per year, cycle time, total annual cost, and reorder point.

Economic Value Added (EVA) answers a question net income can't: after paying for all the capital a business uses.

Email List Growth projects email list growth and subscriber revenue.

Email Marketing ROI calculates email campaign ROI, revenue per send, cost per email, and lists health.

Employee Cost estimates total cost of hiring including benefits and taxes.

Employee turnover cost estimates the expense of replacing a worker, including vacancy time, recruiting, onboarding, lost productivity, separation, and manager time.

Employer GLP-1 coverage cost models the annual and per-member-per-month (PMPM) health plan expense of offering weight-loss prescription drug benefits.

Enterprise Value calculates company's enterprise value from its market capitalization, total debt, and cash (EV = market cap + debt - cash), plus EV/EBITDA.

EV Fleet Total Cost of Ownership compares the total cost of ownership of an electric vs gas or diesel fleet: per-mile energy, maintenance, charging install, and breakeven year.

Business expenses that remain constant regardless of production or sales volume. Examples include rent, insurance, and salaries. Contrasts with variable costs.

Franchise Cost calculates franchise investment, royalties, break-even, and 5-year ROI.

Freelance Rate calculates ideal freelance hourly or project rate.

Freelance versus W-2 income comparison calculates the gross 1099 billing revenue needed to achieve financial parity with a W-2 salary after accounting for employer benefits, paid time off, and SE tax.

Full-Time Equivalent (FTE) standardizes part-time and full-time employee hours into equivalent full-time workloads, where 1.0 FTE equals 40 hours per week (2,080 hours/year).

GMV calculates gross merchandise value, net GMV after returns, and marketplace take-rate revenue.

Google Ads ROI calculates Google Ads ROI, ROAS, cost per conversion, and break-even metrics from CPC and conversion rate.

Gross margin is the percentage of total sales revenue remaining after direct cost of goods sold (COGS) are deducted.

Home care agency bill rate calculates the hourly client service rate required to cover caregiver wages, payroll taxes, overhead, and target operating margin.

Influencer Marketing ROI calculates influencer marketing ROI, earned media value, and cost per engagement across platforms.

Inventory Reorder Point calculates reorder point, EOQ, safety stock, and total inventory costs.

Inventory Turnover calculates inventory turnover ratio, DSI, carrying cost, and excess inventory vs industry benchmarks.

Invoice factoring is a financing arrangement in which a business sells unpaid invoices for an upfront advance and pays a fee for faster access to cash.

The total revenue a business can expect from a single customer account throughout their entire relationship. A key metric for evaluating marketing spend efficiency.

A SaaS efficiency metric measuring how much new ARR is generated for every dollar of sales and marketing spend. Formula: (New MRR this quarter × 4) / Prior quarter S&M spend. A score above 1.0 is efficient.

Marginal Cost calculates marginal cost of production from the change in total cost and the change in quantity, and compares to average cost.

Marginal Revenue calculates marginal revenue from the change in total revenue and the change in quantity sold, and finds the profit-maximizing point.

Markup is the percentage or dollar amount added to the cost price of goods or services to establish the final retail selling price.

Menu Item Pricing calculates optimal menu item prices using food cost method, competitive pricing, and demand factors. Includes margin analysis and menu engineering insights.

The percentage of revenue remaining after all expenses — including COGS, operating costs, interest, and taxes — have been deducted. The definitive measure of profitability.

Net Profit Margin calculates net profit margin from net income and revenue, and the operating and gross margins for comparison.

NPS calculates Net Promoter Score and benchmark against industry.

The percentage of recurring revenue retained from existing customers including expansions, upgrades, and downsells, but excluding new customers. NRR above 100% means a business grows revenue even without adding new customers.

Payback period is the time required for an investment's cumulative cash flow to recover its initial cost. Discounted payback also accounts for the time value of money.

Payroll processing computes employee gross earnings, statutory tax withholdings (Federal, FICA, State), employer payroll taxes (FUTA, SUTA), and voluntary benefit deductions for net paycheck disbursement.

Payroll Tax calculates true employer cost of payroll — Social Security, Medicare, FUTA, per-state SUTA, workers' comp, and benefits — with 2026 rates and a 50-state comparison.

Price Elasticity of Demand calculates price elasticity of demand from the change in price and quantity, using the midpoint method, with an elastic/inelastic verdict.

Pricing Strategy compares cost-plus, value-based, and competitive pricing strategies side by side.

Forecast Year 1–3 revenue, customers, and gross profit from target market size and penetration rate. Model break-even month and total cash required.

Profit margin is the percentage of revenue remaining after subtracting costs, measuring how effectively a business converts sales into actual profit.

PTO accrual calculates paid time off earned per pay period, projected balance milestones, and the net cash value of unused vacation payouts.

A two-dimensional barcode that stores information (URLs, text, contact info) readable by smartphone cameras. Used in marketing, payments, and product identification.

Section 1202 Qualified Small Business Stock (QSBS) allows eligible founders and investors to exclude up to 100% of capital gains on small business stock held over 5 years.

The Quick Ratio (Acid-Test Ratio) measures a firm's ability to cover short-term liabilities immediately with liquid assets, excluding less liquid inventory.

The federal R&D tax credit (Section 41) reduces tax liability for qualifying research and development expenses, with a payroll tax offset of up to $500,000 for qualified small businesses.

Referral Program ROI calculates referral program ROI, commission cost per referred customer, and partnership revenue.

Restaurant Food Waste Cost calculates restaurant food waste costs by category — prep, spoilage, plate waste, and comps — then model annual losses and ROI from a waste reduction program.

Restaurant Profit Margin calculates restaurant profit margin, food cost %, prime cost, EBITDA, and break-even with industry benchmarks.

The retention ratio measures how much of a company's earnings stays inside the business — reinvested in growth.

Return on Assets calculates return on assets (ROA) from net income and total assets, to measure how efficiently a company uses its assets to generate profit.

Return on Equity calculates return on equity (ROE) from net income and shareholders' equity, with a DuPont breakdown link and a benchmark interpretation.

Rideshare driver earnings calculate net take-home pay for gig drivers after platform commissions, fuel costs, per-mile vehicle depreciation, maintenance, and self-employment taxes.

A marketing metric measuring revenue generated per dollar spent on advertising. A ROAS of 4:1 means $4 in revenue for every $1 in ad spend.

An annualized estimate of a metric (usually revenue) based on current performance. If a company earned $500,000 in Q1, its revenue run rate is $2,000,000 annually. Useful for projecting early-stage growth.

SaaS CAC calculates SaaS customer acquisition cost and payback.

Key performance indicators specific to software-as-a-service businesses, including MRR, ARR, churn rate, NRR, CAC, LTV, and burn rate. These metrics track the health and efficiency of a recurring revenue business.

Unified SaaS unit economics dashboard: LTV, CAC, LTV:CAC ratio, payback period, magic number, and Rule of 40.

Sales Commission calculates flat, tiered, and quota-based sales commissions and project annual OTE earnings.

Section 179 and bonus depreciation allow commercial businesses to immediately deduct the full purchase price of qualifying capital equipment, software, and vehicles in the year placed in service.

Severance Pay estimates severance pay based on tenure and salary.

Social Media Advertising ROI calculates social ad ROI, ROAS, and funnel metrics from CPM, CTR, and CVR across platforms.

Social Media ROI measures social media campaign ROI and cost per lead.

Startup equity dilution models founder and investor ownership percentage changes across seed, venture rounds, option pool top-ups, and exit scenarios.

Startup Runway calculates how many months of cash runway remain.

Startup Valuation estimates startup valuation by revenue multiple or DCF.

The sustainable growth rate (SGR) answers a simple but important question: how fast can a company grow using only the.

TAM, SAM, and SOM describe market size: the total addressable market, the serviceable available market, and the portion a business can realistically obtain.

Tariff & Import Landed-Cost calculates landed cost of imported goods: product cost, tariff/duty, freight, insurance, and fees, plus the per-unit cost and margin impact.

Times interest earned (TIE) tells a lender how many times over a company's operating earnings could cover its interest.

Tipped employee payroll calculates minimum cash wages, tip credits, tipped overtime rates, and employer make-up pay requirements by state under the FLSA.

Training ROI compares the value created by employee training with the program's cost, using productivity gains, reduced errors, and other measurable benefits.

The direct revenues and costs associated with a single unit of business — typically one customer or one product. Positive unit economics (LTV > CAC) is a prerequisite for a sustainable, scalable business.

Business expenses that change in proportion to production or sales volume. Examples include raw materials, packaging, and sales commissions. Contrasts with fixed costs.

Website Ad Revenue estimates website ad revenue from pageviews and RPM.

Workers Comp Rate calculates workers compensation insurance premiums.

Working capital is the difference between current assets and current liabilities. It indicates the short-term resources available to operate a business and meet near-term obligations.

The 1099-K reporting threshold requires payment processors to report gross transactions for goods and services, helping online resellers estimate taxable net profit.