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.

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Is CFO Grade financial advice?

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Industry-Specific

Monthly Recurring Revenue (MRR)

Short answer

Monthly Recurring Revenue (MRR) is the canonical SaaS metric — predictable subscription revenue normalised to a monthly cadence, with one-time fees and overages excluded. ARR is just MRR × 12.

Worth quotingNet New MRR (new + expansion − churn − contraction) is the directional metric institutional SaaS investors weight most heavily, because it strips out gross-add vanity from sustainable growth.

Formula

MRR = Σ (Active Subscriptions × Monthly Price)

Take every active subscription, normalize annual plans to a monthly equivalent (annual ÷ 12), and sum them up. The result is the recurring revenue you'd collect this month if nothing changed.

Why it matters

MRR is the canonical SaaS metric. It strips out lumpy one-time revenue so investors can see the underlying compounding base. ARR (annual recurring revenue) is just MRR × 12. Growth in MRR — especially Net New MRR after churn — is how SaaS multiples are set.

Benchmarks

Early growth10–20% MoM

Steady scale3–8% MoM

Mature1–3% MoM

Stalled≤ 0% MoM

Worked example

Monthly subscribers (× $79)320 × $79 = $25,280
Annual subscribers (× $720)85 × ($720 ÷ 12) = $5,100

MRR = $25,280 + $5,100 = $30,380

Common questions about Monthly Recurring Revenue (MRR)

What is Monthly Recurring Revenue (MRR)?+

Monthly Recurring Revenue (MRR) is the normalized monthly subscription revenue a business expects, excluding one-time fees, setup charges, and overages.

How is Monthly Recurring Revenue (MRR) calculated?+

Take every active subscription, normalize annual plans to a monthly equivalent (annual ÷ 12), and sum them up. The result is the recurring revenue you'd collect this month if nothing changed.

What is a good Monthly Recurring Revenue (MRR)?+

A healthy monthly recurring revenue (mrr) is typically around 10–20% MoM — early growth. Specific targets vary by industry and stage; check our benchmarks above for your sector.

Why does Monthly Recurring Revenue (MRR) matter?+

MRR is the canonical SaaS metric. It strips out lumpy one-time revenue so investors can see the underlying compounding base.

See your business's monthly recurring revenue (mrr).

Paste your numbers and CFO Grade computes this — plus 23 other ratios — in seconds, with your industry's benchmark already loaded.

Related concepts

Net Revenue Retention (NRR)Rule of 40 (SaaS)Burn Multiple (Startups)

Where this matters most

See Monthly Recurring Revenue (MRR) in the context of saas & software.

Industry-specific benchmarks, common pitfalls, and what lenders look for in this sector.

SaaS & software hub