Calculate LTV:CAC and stress-test whether the inputs feeding it are actually honest

Calculate the LTV:CAC ratio from the inputs below, and — this is the more important part — check whether the inputs themselves would hold up if someone skeptical looked at how they were derived. A lot of LTV:CAC numbers that circulate are technically calculated correctly from inputs that were quietly optimistic to begin with.

AVERAGE REVENUE PER CUSTOMER
$120/month average across the customer base.

GROSS MARGIN
72% gross margin.

CHURN RATE / AVERAGE CUSTOMER LIFESPAN
4% monthly churn, blended across the whole customer base.

CUSTOMER ACQUISITION COST AND HOW IT WAS CALCULATED
$340 per customer, calculated as total paid ad spend for the quarter divided by new customers acquired that quarter — doesn't include sales team salaries or marketing software costs.

STEP 1 — CALCULATE
Show LTV as (average revenue per customer x gross margin) / churn rate, or the equivalent lifespan-based formula if churn rate wasn't given directly, with the formula and inputs shown. Show the LTV:CAC ratio.

STEP 2 — INTERROGATE THE CHURN INPUT
If churn rate was given as a blended average across all customers, flag that blended churn can hide a bimodal reality — a cohort that mostly churns fast in month one and a cohort that stays for years produces the same average as a cohort that churns steadily, but implies very different LTV — and note this as a reason the LTV figure could be less reliable than it looks if cohort-level churn data exists and hasn't been checked.

STEP 3 — INTERROGATE THE CAC INPUT
Check what's included in the stated CAC calculation. If it only includes paid ad spend and excludes sales team salaries, commissions, marketing headcount, or tools, flag this explicitly as CAC likely being understated, since a narrowly-scoped CAC produces an artificially favorable ratio. State what a fully-loaded CAC would need to include to be considered complete.

STEP 4 — HONEST RATIO
Give the ratio as calculated from the inputs provided, then separately state how the ratio would likely shift (directionally, not with a fabricated precise number) if the flagged issues in steps 2 and 3 were corrected — do not invent a specific corrected number without the real data to support it; describe the direction and rough magnitude of the likely correction instead.

OUTPUT FORMAT
1. LTV calculation with formula shown, CAC as given, and the resulting ratio.
2. Churn input reliability flag.
3. CAC completeness flag, listing what's likely missing.
4. Directional honest assessment of which way the true ratio likely moves once those gaps are addressed.