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CMA Final · Entrepreneurship and Startup · Types of New Age Business

Case: Pixelnest's subscription revenue is recognised monthly, yet a customer pays for a full year in advance. For a startup tracking performance, which metric best captures predictable recurring revenue normalised to a monthly figure?

Monthly recurring revenue, or MRR, is the right metric. It converts subscription fees, including annual prepayments spread over twelve months, into a predictable monthly figure. Burn rate and runway concern cash, and gross merchandise value relates to marketplace transaction volumes rather than recurring subscriptions.

  1. AMonthly recurring revenue (MRR)Correct
  2. BBurn rate
  3. CGross merchandise value (GMV)
  4. DRunway

Explanation

MRR normalises subscription fees, including annual prepayments divided by twelve, into a monthly recurring figure. Burn rate measures cash outflow, GMV is the total value of goods transacted on a marketplace, and runway is the months of cash left.

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