Ratios
Financial ratio formulas
Definitions for dashboard ratios Pocket-CFO calculates from backend-normalized accounting data.
Gross Margin %
Supported in dashboardFormulaGross Profit / Net Revenue
- Calculation method
- Uses mapped revenue and direct cost categories after backend normalization.
- Use case
- Measures how much revenue remains after direct costs.
- Limitations
- Sensitive to revenue and COGS mapping quality.
- Required source data
- Profit and Loss revenue and COGS lines.
Net Margin %
Supported in dashboardFormulaNet Income / Net Revenue
- Calculation method
- Uses deterministic net income and revenue results.
- Use case
- Measures overall profitability.
- Limitations
- One-time income or expense can distort short periods.
- Required source data
- Profit and Loss revenue, expense, other income, and other expense lines.
Operating Expense Ratio
Supported in dashboardFormulaOperating Expenses / Net Revenue
- Calculation method
- Divides mapped operating expenses by net revenue.
- Use case
- Shows operating cost structure.
- Limitations
- Requires clean operating expense mapping.
- Required source data
- Profit and Loss operating expense and revenue lines.
Current Ratio
Supported in dashboardFormulaCurrent Assets / Current Liabilities
- Calculation method
- Uses mapped short-term asset and liability categories.
- Use case
- Measures short-term liquidity.
- Limitations
- Only as reliable as balance sheet classification.
- Required source data
- Balance Sheet current assets and current liabilities.
Quick Ratio
Supported in dashboardFormulaCash + Accounts Receivable / Current Liabilities
- Calculation method
- Uses cash, AR, and current liabilities.
- Use case
- Measures stricter liquidity.
- Limitations
- Inventory and prepaid assets are intentionally excluded.
- Required source data
- Balance Sheet cash, AR, and current liabilities.
Debt-to-Equity
Supported in dashboardFormulaTotal Debt / Total Equity
- Calculation method
- Divides mapped debt by mapped equity.
- Use case
- Measures leverage.
- Limitations
- Owner distributions and retained earnings classification matter.
- Required source data
- Balance Sheet debt and equity lines.
Burn Rate
Supported in dashboardFormulaOperating Expenses - Net Revenue, floored at zero for MVP
- Calculation method
- Uses backend-calculated monthly operating expense and revenue proxy.
- Use case
- Measures monthly cash consumption proxy.
- Limitations
- Not a replacement for a cash-flow statement.
- Required source data
- Normalized revenue and operating expenses.
Runway
Supported in dashboardFormulaCash Balance / Monthly Burn Rate
- Calculation method
- Uses backend cash balance and burn rate results.
- Use case
- Estimates months of operating runway.
- Limitations
- Not useful when burn is zero or cash mapping is incomplete.
- Required source data
- Balance Sheet cash and calculated burn rate.
Revenue Growth %
Supported in dashboardFormulaCurrent Period Revenue - Prior Period Revenue divided by absolute prior period revenue
- Calculation method
- Compares current and prior backend metric periods.
- Use case
- Measures revenue trend.
- Limitations
- Unavailable when prior revenue is zero or missing.
- Required source data
- Two periods of normalized revenue.
ARPA
Supported in dashboardFormulaTotal MRR / Active Recurring Accounts
- Calculation method
- Uses configured recurring revenue and active recurring accounts.
- Use case
- Measures average recurring revenue per account.
- Limitations
- Requires recurring revenue setup and confidence review.
- Required source data
- QuickBooks customers plus configured recurring revenue transactions.
Total MRR
Supported in dashboardFormulaNew MRR + Expansion MRR - Churned MRR
- Calculation method
- Uses configured recurring customer revenue movement.
- Use case
- Measures recurring revenue base movement.
- Limitations
- Requires MRR configuration before it is reliable.
- Required source data
- Customers, invoices, sales receipts, and recurring revenue configuration.
New MRR
Supported in dashboardFormulaCurrent recurring revenue from new customers
- Calculation method
- Classifies recurring customers with no prior-period recurring revenue.
- Use case
- Shows new recurring revenue added in the period.
- Limitations
- Requires customer-level recurring source configuration.
- Required source data
- Customers and configured recurring revenue transactions.
Expansion MRR
Supported in dashboardFormulaPositive increase from retained recurring customers
- Calculation method
- Compares current and prior recurring revenue by customer.
- Use case
- Shows expansion from existing accounts.
- Limitations
- Can be noisy if recurring revenue sources are incomplete.
- Required source data
- Customer-period recurring revenue.
Churned MRR
Supported in dashboardFormulaPrior recurring revenue for customers with zero current recurring revenue
- Calculation method
- Uses configured churn detection method.
- Use case
- Shows recurring revenue lost in the period.
- Limitations
- Missing current-period revenue is only a proxy unless cancellations are tracked.
- Required source data
- Prior and current customer recurring revenue.
Net MRR Change %
Supported in dashboardFormulaNew MRR + Expansion MRR - Churned MRR
- Calculation method
- Uses backend MRR movement metrics.
- Use case
- Shows directional change in recurring revenue.
- Limitations
- Contraction MRR is deferred in MVP unless later configured.
- Required source data
- MRR metric results.