How is the Rule of 40 calculated?

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To calculate the Rule of 40, first find the company’s year-over-year revenue growth percentage. Next, determine the profit margin, often EBITDA or free cash flow margin. Add both figures together. If the result is 40 or higher, the company is considered financially strong. This calculation helps quickly evaluate SaaS business performance, balancing high growth with profitability.
For more visit: https://zingmatrix.com/rule-of-40/

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