Plain-language definitions of the finance, schedule, and operating terms that matter most for appointment-based businesses. No jargon, no fluff, just clarity.
An accounts receivable aging report buckets every unpaid customer invoice by how long it has been outstanding — typically current (0–30 days), 31–60, 61–90, and 90+ days. The bucket distribution shows the health of collections: the more revenue sitting in 60+ buckets, the more cash is at risk.
Days sales outstanding (DSO) is the average number of days between issuing an invoice and collecting payment. It is calculated as accounts receivable divided by average daily sales, expressed in days. Lower DSO means faster collections and less working capital tied up in unpaid invoices. Industry benchmarks vary widely, but for most B2B SMBs, DSO between 30 and 45 days is healthy.
Burn rate is the amount of cash a business consumes each month. Gross burn is total monthly cash outflows; net burn is outflows minus inflows — the actual decrease in the cash balance. Burn rate, combined with cash on hand, defines runway. Most owners speak about burn in net terms because that's what determines time to zero.
Free cash flow (FCF) is the cash a business generates after paying all operating expenses and capital expenditures needed to maintain or grow the business. It is the cash truly available to owners, lenders, or for reinvestment. Free cash flow can be very different from net income because of timing differences, depreciation, and capital spending — and it is the closest cash-based measure of business value creation.
Runway is the number of months a business can continue operating at its current cash burn before running out of cash. It is calculated as cash on hand divided by net monthly cash burn (the amount cash decreases each month). Runway shrinks during loss-making months and extends when the business is cash-flow positive.
The current ratio is total current assets divided by total current liabilities — a measure of whether the business has enough short-term resources to cover obligations due within the next 12 months. A current ratio above 1.0 means current assets exceed current liabilities; below 1.0 means the business will need to sell longer-term assets, raise capital, or refinance to cover near-term bills.
The quick ratio (also called the acid-test ratio) measures whether a business can cover its current liabilities using only its most liquid assets — cash, accounts receivable, and marketable securities — without relying on selling inventory. A quick ratio of 1.0 means liquid assets exactly cover short-term obligations. Above 1.0 means a buffer; below 1.0 means the business depends on selling inventory or raising capital to meet short-term obligations.
The break-even point is the level of sales — measured in either units or dollars — at which total revenue exactly equals total costs. Below break-even, the business is losing money; above it, every additional sale contributes operating profit. Break-even is calculated using fixed costs and contribution margin and is one of the most useful planning numbers for pricing, capacity, and hiring decisions.
Contribution margin is the dollars or percentage left from a sale after subtracting only the variable costs of producing it — the costs that scale up or down with each unit sold. Each dollar of contribution margin first covers fixed costs (rent, salaries, software) and only after fixed costs are covered does it become profit. It is the most useful number for pricing, mix, and break-even decisions.
EBITDA is earnings before interest, taxes, depreciation, and amortization. It measures the operating profitability of a business independent of capital structure (interest), tax jurisdiction (taxes), and accounting choices about long-lived assets (depreciation and amortization). EBITDA is the single most common number used to compare businesses to peers and to value a business in a sale or financing.
Gross margin is revenue minus the direct cost of goods or services delivered, expressed as a percentage of revenue. It is the share of every sales dollar that remains to cover overhead, salaries, and profit. Gross margin defines the maximum amount a business can ever spend on everything else, which is why most strategic decisions trace back to this single number.
Operating margin is operating income (revenue minus cost of goods sold and minus all operating expenses) as a percentage of revenue. It measures how much of each sales dollar is left as profit from running the core business, before interest expense and income taxes. It is the cleanest single measure of operational efficiency.
The cash conversion cycle (CCC) is the number of days it takes a business to turn cash spent on operations back into cash in the bank. It is calculated as days inventory outstanding plus days sales outstanding minus days payable outstanding. Lower is better — a shorter cycle means less working capital tied up in operations and more cash available for growth.
Working capital is current assets minus current liabilities — what the business has available in short-term liquid resources to fund day-to-day operations after meeting near-term obligations. Positive working capital means the business can cover the next year's obligations from cash, AR, and inventory. Negative working capital is sustainable in some models but a warning sign in most.
Fynso doesn't just define these metrics. It connects them so you can see what changed and what to do next.