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.

Industry-Specific

CAC Payback Period

Short answer

CAC Payback Period is the number of months a new customer's gross margin takes to repay the acquisition cost. It answers the cash-flow question LTV:CAC ignores: how long do you have to fund this customer before they break even? Sub-12-month payback is the conventional SaaS benchmark.

Formula

Payback Months = CAC / (ARPU × Gross Margin / 12)

Divide your CAC by the monthly gross profit a customer generates. The result is how many months it takes to earn back the acquisition cost.

Why it matters

Payback period answers the cash-flow question that LTV:CAC ignores: how long do I have to fund this customer before they break even? Faster payback means a more capital-efficient growth engine. Sub-12-month payback is the institutional SaaS standard; sub-24 is acceptable for higher-LTV enterprise sales.

Benchmarks

Best-in-class< 12 months

Acceptable12–24 months

Capital-heavy24–36 months

Likely unprofitable> 36 months

Worked example

CAC$1,200
Monthly ARPU$200
Gross margin75%

Payback = $1,200 ÷ ($200 × 0.75) = 8 months

Common questions about CAC Payback Period

What is CAC Payback Period?+

CAC Payback Period is the number of months a new customer's gross margin must cover before you recoup what you spent acquiring them.

How is CAC Payback Period calculated?+

Divide your CAC by the monthly gross profit a customer generates. The result is how many months it takes to earn back the acquisition cost.

What is a good CAC Payback Period?+

A healthy cac payback period is typically around < 12 months — best-in-class. Specific targets vary by industry and stage; check our benchmarks above for your sector.

Why does CAC Payback Period matter?+

See your business's cac payback period.

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

Related concepts

Customer Acquisition Cost (CAC)LTV:CAC Ratio Burn Multiple (Startups)

Where this matters most

See CAC Payback Period in the context of saas & software.

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

SaaS & software hub