Run Rate
What is Run Rate?
Run rate is an estimate of a company’s future performance based on its current financial data. It is often used to predict annual revenue or expenses by extrapolating recent financial results. For startups, run rate helps gauge the sustainability of growth and identify potential challenges in scaling the business.
How to Calculate Run Rate
- Revenue Run Rate: Monthly revenue multiplied by 12 to estimate annual revenue.
- Expense Run Rate: Monthly expenses multiplied by 12 to forecast annual expenses.
- Applicability: Useful for startups and businesses experiencing rapid growth or seasonal changes.