The term run rate refers to the financial performance of a company based on its current business fundamentals, and is used to predict its future performance with the assumption that market conditions remain constant. For example, if a company has generated $50 million in revenue each quarter for the past three quarters, the run rate for the following quarter would be estimated at $50 million, and the annual revenue run rate would be estimated at $200 million.Calculating the run rate of an organization is a more accurate form of forecasting compared to the bottoms-up and top-down forecasting methods. It is particularly useful for estimating the performance of companies or departments that have been operating for less than a year.While the run rate of a mature business is relatively consistent, for seasonal businesses or businesses whose sales are highly dependent on the economic landscape (such as the travel or luxury clothing industry) it can be highly inaccurate.