What is a good EBITDA margin for a small business?

Most healthy small businesses run an EBITDA margin between 10% and 20%. Service businesses and SaaS often run higher (20–35%+), while restaurants and retail typically run 10–15%. CFO Grade compares your EBITDA margin to industry-specific benchmarks across 16 sectors.

What DSCR do lenders look for?

Most SBA and commercial lenders require a Debt Service Coverage Ratio (DSCR) of at least 1.25x. Construction surety bonds often require 1.5x or higher. A DSCR below 1.0x means your EBITDA does not cover your annual debt payments.

How does CFO Grade calculate the letter grade?

CFO Grade scores 24+ financial ratios across profitability, liquidity, leverage, and efficiency — weighted by industry. The composite score maps to a letter grade from A+ to F. The full methodology and benchmark sources are described in the report and the disclaimer page.

Yes. The full analysis, 24+ ratios, letter grade, and industry benchmarks are completely free with no signup. Optional paid features include a $9 PDF export and a $19 Pro Pass with AI-generated CFO memo and 30 days of unlimited PDFs.

Do I need to create an account?

No account is required. Your numbers stay on your device unless you explicitly opt in to anonymized peer benchmarking. Pro entitlements are bound to your device with a restore link you can email yourself.

Is CFO Grade financial advice?

No. CFO Grade provides educational insights for business owners and analysts. It is not financial, tax, legal, or investment advice. Always verify the output with a qualified professional before making business decisions.

SaaS & software

The financial health check every SaaS founder should run before a raise.

Rule of 40, burn multiple, runway, gross margin — get the metrics a credit committee or VC analyst would compute, in one click.

Free

Industry benchmarks

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Worth quotingRule of 40 is the single most-cited SaaS health metric. A score of 40 or higher (growth % + EBITDA margin %) qualifies you for premium revenue multiples; below 20 caps your valuation at 2–4× ARR.

Built for owners and analysts who say…

"You can recite ARR but not your Rule of 40.
"Burn multiple is rising and you don't know if that's normal.
"Need a clean analyst-tier readout for board / investors.

What you'll get

Rule of 40 calculation against SaaS medians
Burn multiple and runway
Analyst-lens memo (think credit committee, not pitch deck)
PDF for investors & board

Common questions about saas & software financials

What is the Rule of 40?+

Rule of 40 = Revenue Growth Rate (%) + EBITDA Margin (%). It's the standard SaaS scorecard used by VCs and PE buyers. A score above 40 indicates the business is balancing growth and profitability efficiently; below 30 is a warning sign.

What is a good burn multiple?+

Burn multiple = Net Burn ÷ Net New ARR. Best-in-class is under 1.0× ('a dollar in, a dollar of new ARR'). 1.0–1.5× is good. 1.5–2.0× is acceptable in early years. Above 2.0× is concerning and typically requires a recap.

How much runway should a SaaS startup have?+

Minimum 18 months of runway is the venture standard — enough to ship the next milestone and run a 6-month fundraise without distraction. Less than 12 months and you're in 'raise immediately or die' territory.

What metrics do SaaS investors care about most?+

ARR, growth rate, gross margin (target: 75%+), Rule of 40, burn multiple, net dollar retention (110%+ is great), CAC payback (under 18 months), and runway. CFO Grade computes all of these from your P&L in one click.