Definition
Net present value (NPV) is the financial metric that calculates the present value of future cash flows. Founders reach for it when a vague conversation needs a shared, specific meaning. Name it clearly, then let the next decision — a hire, a price, a test, or a pass — follow from that meaning.
In the room
How the word shows up in a real conversation.
You know Net present value (NPV) is doing work when it changes a weekly choice — price, hire, channel, or kill. The working definition: Financial metric that calculates the present value of future cash flows.
Common mistake
Using Net present value (NPV) as a label instead of a fact. If you cannot point to the evidence — a number, a customer, or a written assumption — you are using the word as jargon.
See also
Net loss margin
Percentage of revenue lost when expenses exceed income.
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Net loss ratio
Financial ratio comparing net loss to total revenue or assets.
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Net present value analysis
Evaluation of investment projects using net present value calculations.
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Net present value ratio
Financial ratio comparing net present value to initial investment.
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