Business Finance calculators

Start from the margin you need instead of from a markup on cost, because the two are computed on different bases and confusing them consistently underprices. Then check the price against what the market will bear and against your break-even volume. A price that is theoretically correct and commercially unsellable is not a price.

When the capital produces more value than the ownership or interest it costs, and when the business can survive the raise taking longer than planned. Raising to fund a proven, repeatable use of money is very different from raising to postpone a decision about whether the model works.

Profit is recognised when revenue is earned and expenses incurred. Cash flow is when money actually moves. A business can be profitable and unable to pay wages because receivables are slow, inventory absorbs cash, or growth consumes working capital faster than operations generate it.

Divide fixed costs by contribution margin per unit. The answer depends heavily on how costs are classified, and fixed costs are only fixed within a capacity range, so treat break-even as a range, not a point and re-run it when the cost structure changes.

It varies enormously by sector. So a figure meaningful in one industry is not in another. More informative than the level is the trend over time and the comparison to peers using the same definitions, since classification choices change every ratio downstream.

Enough to reach the next milestone plus a margin for it taking longer than planned. A simple calculation divides unrestricted cash by net burn, but burn rarely stays constant: hiring, seasonality, tax payments and capital purchases all move it. So a forecast beats a division.

Because with a positive cash conversion cycle each additional sale must be funded from paying for inputs until collecting revenue. More sales means more gaps funded at once, which is why profitable growing businesses need working capital.

Gross margin, operating margin, cash balance and runway, receivable ageing, and the cash conversion cycle. The specific set matters less than reviewing the same definitions every month, because a ratio only means something in comparison.

A price rise flows almost entirely to profit, while a cost cut of the same amount does too but is usually harder to find repeatedly. The constraint on pricing is demand. That is why testing a rise on new customers first is lower risk than an across-the-board change.

Stopping the moment a result looks significant raises the chance of a false positive well above the stated p-value. Fixing the sample size or the stopping rule in advance keeps the test honest.

Overall equipment effectiveness multiplies availability, performance and quality to show how much of the possible output a machine really delivers. It shows which of the three losses is the biggest.

Pick a service level, measure the variation in daily demand and use the lead time. Higher service levels and longer lead times need more stock, and variation matters most.

Compare each price with the full cost of a unit, including overhead and your own time. Steady sales with a thin or shrinking margin point to prices that are too low, and a small test increase shows how demand responds.

It is the cash tied up between paying suppliers and collecting from customers. A profitable business can still run short of cash if the gap is long, so a shorter cycle frees money without borrowing.

It spreads an asset's cost over its useful life as an expense, so reported profit is lower than cash profit in the years it is charged. The cash left the business when the asset was bought.

The sales and marketing spending in a period divided by the number of new customers won in it. Compare it with the margin a customer brings over time to see whether growth pays for itself.

Late payment lengthens the cash conversion cycle, ties up working capital and can force borrowing. Tracking days sales outstanding shows the problem before it becomes a cash shortage.

Compare the loan's interest and fees with what the cash would otherwise earn or protect, and keep a reserve either way. A loan preserves cash and your own cash avoids interest, and the return on the equipment decides which is better.

At least every quarter, and whenever a major cost changes. Costs drift upward between reviews and quietly erode margin, while prices left unchanged do not keep up.

It varies widely by industry, so compare it with your own history and with similar businesses. A rising rate with flat sales signals cost creep that is worth investigating.

How much of the business is funded by borrowing compared with the owners' money. Higher ratios mean more risk to the lender, and what is normal differs a great deal between industries.

Subtract the cost of goods sold from revenue and divide by revenue. A business with $1,200,000 of revenue and $700,000 of cost of goods sold has a gross margin of about 41.7 percent.

Many aim for several months of fixed costs. The right amount depends on how predictable the revenue is, how quickly customers pay and how easily the business can borrow in a shortfall.

When demand consistently exceeds capacity and the added revenue covers the full cost of the hire, including payroll taxes, equipment and training. A short spike in work is often better met with overtime or contractors.

Cost of goods sold divided by average inventory. A low turnover means stock sits and ties up cash, and a very high one can mean frequent stockouts.

Start with cash on hand, add expected collections, subtract known payments and payroll, and adjust for seasonality. Update the forecast weekly, since small timing slips add up.

Fixed costs stay the same as volume changes within a range, such as rent. Variable costs rise with each unit, such as materials. The split drives the break-even calculation.

Markup is profit as a percent of cost, while margin is profit as a percent of the selling price, so the same sale gives a lower margin.

Above 1 means current assets cover short-term debts, and many businesses aim for 1.5 to 2, though the norm varies by industry.

Divide fixed costs by the contribution margin per unit, which gives the number of units you must sell to cover all costs.