ROI (Return on Investment) is a financial metric used to evaluate the profitability or efficiency of an investment. It shows how much profit you make on an investment relative to its cost.
ROI (%) = [(Net Profit / Investment Cost) × 100]| Investment Cost | ₹5,00,000 |
| Return Received | ₹6,50,000 |
| Net Profit | ₹1,50,000 |
| Total ROI | 30% |
✅ Shows a 30% return on the ₹5L investment.
| Ad Spend | ₹50,000 |
| Sales Revenue | ₹80,000 |
| Net Profit | ₹30,000 |
| Total ROI | 60% |
✅ Each ₹1 spent generated ₹1.60 in revenue.
COGS refers to the direct costs involved in producing the goods a company sells. It includes raw materials, labor, and production-related expenses. Understanding COGS helps a business evaluate its pricing strategy and profitability.
COGS = Opening Inventory + Purchases – Closing Inventory| Opening Inventory | ₹2,00,000 |
| Purchases | ₹5,00,000 |
| Closing Inventory | ₹1,50,000 |
| Total COGS | ₹5,50,000 |
✅ Reflects direct costs of selling tech hardware.
| Opening Inventory | ₹40,000 |
| Purchases | ₹2,00,000 |
| Closing Inventory | ₹30,000 |
| Total COGS | ₹2,10,000 |
✅ COGS includes labor and raw input for each furniture unit.
Intellectual Property (IP) refers to the legal rights that protect creations of the mind such as inventions, artistic works, designs, symbols, names, and images used in commerce. IP enables innovators to benefit financially from their creativity and effort.
A startup developing a unique mobile wallet system files for a patent to protect its backend algorithm.
✅ Prevents competitors from copying the core technology.
A D2C skincare brand registers its logo and slogan as a trademark to protect its identity.
✅ Secures branding and avoids lookalikes in the market.
EBITDA is a financial metric that evaluates a company's profitability before deducting interest, taxes, depreciation, and amortization. It provides a clearer picture of the company's operational efficiency.
EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization| Net Income | ₹8,00,000 |
| Interest Expense | ₹50,000 |
| Taxes Paid | ₹1,20,000 |
| Depreciation | ₹70,000 |
| Amortization | ₹60,000 |
| Total EBITDA | ₹11,00,000 |
✅ Reflects core profitability from software operations.
| Net Income | ₹5,50,000 |
| Interest Expense | ₹1,00,000 |
| Taxes Paid | ₹80,000 |
| Depreciation (kitchen) | ₹90,000 |
| Amortization (license) | ₹30,000 |
| Total EBITDA | ₹8,50,000 |
✅ Shows performance of operations before financing or licensing impacts.
A Profit & Loss (P&L) Statement is a financial document that summarizes the revenues, costs, and expenses incurred by a business during a specific period. It shows whether a business is making a profit or facing a loss and is crucial for financial planning and decision-making.
✅ The café earned a 25% net margin.
✅ The business maintained a healthy profit after major operational costs.
B2B (Business to Business) refers to commercial transactions conducted between two businesses rather than between a business and an individual consumer. These interactions often involve bulk orders, longer sales cycles, and relationship-driven processes.
A software company sells project management tools to startups and tech firms under an annual license agreement.
✅ Technology solutions for business clients.
A garment manufacturer supplies clothes in bulk to retail chains like Reliance Trends or Pantaloons.
✅ Bulk sales and long-term B2B relationships.
B2C (Business to Consumer) refers to transactions where businesses sell products or services directly to individual consumers. These deals are typically faster, lower in volume, and driven by consumer behavior and marketing influence.
An online store like Amazon sells gadgets, clothes, and household items directly to customers.
✅ Customer-focused pricing, UI/UX, and delivery.
A fitness app like Cult.Fit or a music app like Spotify offers subscriptions directly to end users.
✅ Personalized services with digital payment options.
CAC (Customer Acquisition Cost) is the total cost a company spends to acquire a new customer. It includes marketing, advertising, sales expenses, and other efforts directly related to customer acquisition.
CAC = Total Marketing & Sales Expenses ÷ Number of New Customers AcquiredA cloud software company spends ₹5,00,000 on sales and marketing and gains 1,000 new customers.
| Total Spend | ₹5,00,000 |
| New Customers | 1,000 |
| CAC | ₹500 |
✅ ₹500 spent per new customer.
A beauty product startup runs influencer and ad campaigns spending ₹3,00,000 to gain 600 customers.
| Total Spend | ₹3,00,000 |
| New Customers | 600 |
| CAC | ₹500 |
✅ Effective use of social media for direct sales.
LTV (Lifetime Value) represents the total revenue a business can expect from a single customer over the entire duration of their relationship. It helps evaluate how much to invest in acquiring and retaining customers.
LTV = Average Purchase Value × Purchase Frequency × Customer LifespanCustomer spends ₹1,200 per order, buys 5 times a year, and stays for 3 years.
| Avg Purchase | ₹1,200 |
| Frequency (per year) | 5 |
| Lifespan (years) | 3 |
| LTV | ₹18,000 |
✅ High-value repeat customer relationship.
User pays ₹250/month, stays subscribed for 24 months.
| Monthly Payment | ₹250 |
| Duration | 24 months |
| LTV | ₹6,000 |
✅ Long-term subscription revenue stream.
An MVP (Minimum Viable Product) is a version of a new product that includes only the core features necessary to be functional and testable. It's designed to gather early customer feedback with minimal development effort and cost.
The first MVP version includes only:
✅ Built in 3 weeks to test market demand before full launch.
The MVP had only:
✅ Feedback helped improve search, filters, and reviews in later releases.
A Unique Selling Proposition (USP) is the key factor that differentiates a product or service from its competitors. It communicates why a customer should choose your brand over others and focuses on your unique value.
USP: “World’s lightest city bike – under 10 kg.”
This appeals to urban commuters looking for portability and speed.
✅ Focuses on product innovation and ease of use.
USP: “Nutritionist-designed, ready-to-eat meals delivered in 30 minutes.”
Targeted at health-conscious professionals with a busy lifestyle.
✅ Emphasizes trust, speed, and health in one line.
A Key Performance Indicator (KPI) is a measurable value that reflects how effectively a business is achieving its key objectives. KPIs vary across industries and departments and are used to track progress and guide decisions.
✅ Used weekly tracking and A/B testing to optimize user flow.
✅ Helped reduce customer complaints and improve satisfaction scores.
Venture Capital (VC) is a form of private equity financing provided by investors to startups and small businesses with strong growth potential. In exchange, venture capitalists receive equity ownership in the company.
A mobile app company raises ₹5 Cr from a VC firm to expand into new markets and hire engineers.
✅ Helped the startup grow from 10K to 1L users in 6 months.
A biotech startup receives ₹20 Cr in Series A funding to develop and test a new diagnostic tool.
✅ Enabled product validation and pilot testing with hospitals.
An IPO (Initial Public Offering) is the process through which a private company offers its shares to the public for the first time. This marks the transition from a private entity to a publicly traded company listed on a stock exchange.
Nykaa went public in 2021, raising over ₹5,300 Cr.
✅ Gave early investors exit and public participation in growth.
Tesla launched its IPO in 2010 at $17 per share, raising $226 million.
✅ Funded innovation and enabled rapid global expansion.
© 2025. All rights reserved.