stock and flow

Also called: stocks and flows

A stock is an amount at a moment (subscribers, MRR, cash); flows change it over a period. End = start + inflows − outflows.

Many business numbers are stocks: amounts measured at a moment, such as active members, monthly recurring revenue or cash in the bank. They change only through flows over a period: what comes in and what goes out.

$\text{end} = \text{start} + \text{in} - \text{out}$

The same rule gives the MRR bridge (start + new + expansion − contraction − churned), the cash bridge (profit adjusted for receivables, payables and prepayments) and cohort counts. Rates such as churn, NRR or GRR divide a flow by the starting stock.

Two ratios turn a stock into time: runway = cash ÷ net burn, and DSO = receivables ÷ credit sales × 365.

Example

Klasna Club MRR: start 300,000; new 45,000; expansion 15,000; contraction 6,000; churned 24,000.

End: 300 + 45 + 15 − 6 − 24 = 330,000.
NRR = (300 + 15 − 6 − 24) ÷ 300 = 95%; GRR = (300 − 6 − 24) ÷ 300 = 90%.

Common mistakes

Dividing by the wrong base. Churn and NRR divide by the start of the period, not the end.
Profit as a cash flow. Receivables, payables and prepayments move cash away from profit.
Mixing a stock with a flow. "MRR of 330,000" is a stock; "45,000 new MRR" is a flow over a month.