A North Star Metric (NSM) is a key metric chosen by a company with the aim of leveraging results and focusing on what really matters. Using a North Star Metric is a way to measure the company's progress with a focus on sustainable business growth. It can be classified as an Output metric as it is the result of different smaller activities that can be measured by other metrics – Input metrics – and which together aim to achieve a specific result and make an impact. Some examples of North Star Metrics from famous companies are the time people spend on the platform watching movies and TV shows (Netflix) and the number of active users per month (Facebook).
NET Profit Margin is the ratio that represents how much is left in a given company's pocket after all sales have been made and expenses, taxes and interests are paid. Thus, it is a percentage calculation of the Net Income over the total revenue generated from a business. This number represents the profitability ratio of a given company - for each dolar made in revenue, what would be the percentage that stays in the companies after deducting COGS, Expenses, Taxes and Interests. Last but not least, this statement result could be positive or negative, representing how healthy is the operation of a business. However, as any kind of business KPI, this should not be evaluated alone, but together with other factors - such as EBITDA, LTV, CAC, WACC and other factors depending on the business strategy and maturity.
NET Income, which is also commonly referred to as a business bottom line, is the figure that represents how much is left in a given company's pocket after all sales have been made and expenses, taxes and interests are paid. It could be referred to also as total earnings - considering that the number is positive, of course. If the figure is negative, it can be referred to as total losses, which represents that this business is not completely healthy, as the final results from total sales is not profitable.
EBITDA stands for earning before interests, taxes, depreciation and amortization, which means it represents the value that is left after adding interests, taxes, depreciation and amortization from a given company NET Income. EBITDA is commonly used by companies, investors and individuals to evaluate businesses as it represents the performance of an operation isolated from their costs of capital used to support the business. As any kind of business KPI, this should not be evaluated alone, but together with other factors - such as Net Income, LTV, CAC, WACC and other factors depending on the business strategy and maturity.
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