# Industry Adaptations

Sector-specific metrics, benchmarks, and considerations for financial analysis.

## SaaS / Software

**Key Metrics:**
- ARR / MRR growth rate
- Net Revenue Retention (NRR) — target >110%
- CAC Payback Period — target <18 months
- Rule of 40 (growth rate + profit margin ≥ 40%)
- LTV:CAC ratio — target >3:1
- Gross margin — target >70%

**Valuation Multiples:**
- Revenue multiple: 5-15x ARR (growth-adjusted)
- High-growth (>50%): 15-25x ARR
- Moderate growth (20-50%): 8-15x ARR
- Low growth (<20%): 3-8x ARR

**Considerations:**
- Deferred revenue recognition (ASC 606)
- Stock-based compensation impact on margins
- Cohort analysis critical for retention metrics

## Retail / E-Commerce

**Key Metrics:**
- Same-store sales growth (SSS)
- Gross margin by category
- Inventory turnover — target varies by segment (grocery: 14-20x, fashion: 4-6x)
- Revenue per square foot (physical)
- Customer acquisition cost vs. AOV
- Return rate impact on unit economics

**Valuation Multiples:**
- EV/EBITDA: 8-15x (premium brands higher)
- P/E: 15-25x

**Considerations:**
- Seasonal revenue concentration (Q4 holiday)
- Working capital intensity (inventory cycles)
- Omnichannel attribution complexity

## Manufacturing

**Key Metrics:**
- Gross margin by product line
- Capacity utilization rate — target >80%
- Days Inventory Outstanding (DIO)
- Warranty reserve as % of revenue
- Capex as % of revenue (maintenance vs. growth)
- Order backlog / book-to-bill ratio

**Valuation Multiples:**
- EV/EBITDA: 6-12x
- P/E: 12-20x

**Considerations:**
- Raw material cost volatility
- Currency exposure in supply chain
- Depreciation schedules (straight-line vs. accelerated)
- Regulatory compliance costs (environmental, safety)

## Financial Services

**Key Metrics:**
- Net Interest Margin (NIM)
- Return on Equity (ROE) — target >12%
- Cost-to-Income Ratio — target <60%
- Non-Performing Loan (NPL) ratio
- Tier 1 Capital Ratio — regulatory minimum varies
- Assets Under Management (AUM) growth

**Valuation Multiples:**
- Price-to-Book (P/B): 1.0-2.5x
- P/E: 10-18x

**Considerations:**
- Regulatory capital requirements (Basel III/IV)
- Interest rate sensitivity analysis
- Credit risk provisioning (CECL / IFRS 9)
- Mark-to-market vs. held-to-maturity accounting

## Healthcare

**Key Metrics:**
- Revenue per patient / per bed
- Payor mix (Medicare/Medicaid vs. commercial)
- EBITDAR margin (rent-adjusted for facilities)
- Clinical trial pipeline value (biotech/pharma)
- Patent cliff exposure
- R&D as % of revenue — benchmark 15-25% (pharma)

**Valuation Multiples:**
- EV/EBITDA: 10-18x (medtech), 12-20x (pharma)
- EV/Revenue: 3-8x (services), 5-15x (devices)

**Considerations:**
- Reimbursement rate changes (regulatory risk)
- FDA approval timelines and probability-weighted pipeline
- 340B pricing program impact
- Medical device regulation (MDR, QSR compliance)
