# Finance Metrics Quickref

> Quick-reference guide for essential finance and business metrics every PM should know — margin, burn rate, runway, revenue recognition, and financial statement basics.

- Skill: `nandanosql/finance-metrics-quickref` (Agent Skill)
- Install (CLI): `npx skillmds@latest add nandanosql/finance-metrics-quickref`
- Raw SKILL.md: https://api.skillmd.com/api/skills/nandanosql/finance-metrics-quickref/raw
- Safety review: pending
- Works with: Claude Code, Claude.ai, OpenAI Codex
- Category: Data & Analytics
- Author: nandanosql (https://skillmd.com/u/nandanosql)
- Updated: 2026-09-17
- Page: https://skillmd.com/skills/nandanosql/finance-metrics-quickref

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## Purpose

Quick-reference for **essential finance and business metrics** every PM should understand — covering margins, revenue, burn rate, runway, and financial statement basics for informed product decisions.

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## Application

### Revenue Metrics

| Metric | Formula | Why PMs Care |
|--------|---------|-------------|
| **MRR** | Sum of monthly recurring revenue | Primary SaaS health metric |
| **ARR** | MRR × 12 | Annual run rate for planning |
| **Net New MRR** | New + Expansion - Contraction - Churn | Shows growth trajectory |
| **ARPU** | Total Revenue / # Customers | Revenue per customer trend |
| **ACV** | Total contract value / years | Average deal size |

### Profitability Metrics

| Metric | Formula | Benchmark |
|--------|---------|-----------|
| **Gross Margin** | (Revenue - COGS) / Revenue | >70% for SaaS |
| **Operating Margin** | Operating Income / Revenue | Varies by stage |
| **Net Margin** | Net Income / Revenue | Positive for profitable companies |
| **Contribution Margin** | (Revenue - Variable Costs) / Revenue | Per-unit profitability |

### Cash Flow Metrics

| Metric | Formula | Why PMs Care |
|--------|---------|-------------|
| **Burn Rate** | Monthly cash spend | How fast you're spending |
| **Runway** | Cash Balance / Monthly Burn | Months until out of cash |
| **Cash Flow** | Cash In - Cash Out | Sustainability indicator |
| **Free Cash Flow** | Operating Cash Flow - CapEx | Available for investment |

### Financial Statement Basics

```markdown
## The Big 3 Financial Statements

### Income Statement (P&L) — "How much did we make?"
Revenue - COGS = Gross Profit
Gross Profit - OpEx = Operating Income
Operating Income - Taxes/Interest = Net Income

### Balance Sheet — "What do we own and owe?"
Assets = Liabilities + Equity

### Cash Flow Statement — "Where did the cash go?"
Operating + Investing + Financing = Net Cash Change
```

### Key Ratios PMs Should Know

| Ratio | Formula | What It Tells You |
|-------|---------|------------------|
| **Rule of 40** | Revenue Growth % + Profit Margin % | >40% = healthy SaaS |
| **Magic Number** | Net New ARR / Prior Quarter S&M | >0.75 = invest more in S&M |
| **Burn Multiple** | Net Burn / Net New ARR | <2x = efficient growth |
| **Quick Ratio** | (New MRR + Expansion) / (Contraction + Churn) | >4 = healthy |

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## References

### Related Skills
- `skills/analytics/saas-economics-efficiency-metrics/SKILL.md` — SaaS unit economics
- `skills/analytics/saas-revenue-growth-metrics/SKILL.md` — Revenue growth metrics
- `skills/growth/finance-based-pricing-advisor/SKILL.md` — Pricing from finance

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**Skill type:** Component
**Domain:** Analytics & Metrics