FP&A Glossary

Burn Multiple

Burn multiple measures how much money a company spends to generate new revenue.

Burn Rate

Burn rate is defined as the negative free cash flow (FCF) during the month.

Cash Runway

Cash runway is the number of months until cash runs out.

Cost of Goods Sold (COGS)

Cost of Goods Sold (COGS) refers to the direct costs associated with producing your product or service.

Expenses

Expenses are the costs incurred by a company during typical business activities and operations.

General And Administrative Expenses

G&A expenses are expenses incurred that aren’t directly tied to producing or selling a product or service, but necessary to maintain business operations overall.

Gross Margin

Gross margin is your company’s net sales revenue minus your Cost of Goods Sold (COGS).

Gross Profit

Gross profit is a company’s earnings after deducting the Cost of Goods Sold (COGS).

Operating Profit

Operating profit is a company’s earnings after deducting operating expenses and Cost of Goods Sold (COGS). It’s also known as EBIT (earnings before interest and taxes). 

Research And Development Expenses

R&D expenses are all costs associated with the research and development of your product or service.

Sales and Marketing Expenses

Sales and marketing expenses are the internal and external expenses incurred that are directly and indirectly related to selling and marketing a product or service.