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Run rate

What is a run rate?

Run rate is a financial metric that estimates future financial performance based on current results. It's often used by startups and other new businesses that don't have a full year of historical data to analyze.

The run rate is calculated by taking a current period's financial results (say a quarter or a month), and projecting them over a full year. For example, if a startup earned $250,000 in revenue in its first quarter, the annual run rate would be $1 million. However, it's important to note that run rate doesn't account for seasonal variations or growth rates, and should be used with caution.

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