The Value of Using NextLevel’s EBITDA Quiz

Dental Business

If you’re planning to sell your practice, looking into joining a DSO, or just wondering how well your business is running, then NextLevel’s EBITDA quiz is a priceless tool. Not only can it determine your current profitability margin, you can also use it to determine what you can do to up your game and meet or beat your profitability goals. How does it all work? Let’s dive in.

Let NextLevel’s EBIDTA Quiz Work For You

EBITDA: A Quick Crash Course

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a financial metric used to evaluate a company’s operating performance and profitability by excluding certain expenses that can vary widely between different businesses or are not directly related to their core operations. ​​In short, EBITDA is a measure that gives a clearer picture of a company’s profitability from its core operations.

Why EBITDA Matters to You

EBITDA is often used by investors, analysts, and lenders to assess a company’s financial health and compare its performance to that of other companies within the same industry. The higher your EBITDA margin, the stronger your practice, and the more attractive your practice is to PE firms. Improving your EBITDA margin means strengthening your position in DSO negotiations, plus putting more profit in your pocket.

Understand the Levers that Determine Your Score

When you use NextLevel Practice’s EBITDA calculator quiz, information from last year’s Profit and Loss statement comes together to determine your practice’s profitability. Information like:

  • Total Revenue: the total amount of money generated from your practice’s activities.
  • Net Income: total amount of profit remaining after deducting all expenses, taxes, interest, and other costs from total revenue.
  • Interest: expenses associated with borrowing money, such as payments on loans or lines of credit.
  • Taxes: income and other tax expenses, which can vary based on your practice’s tax strategies, deductions, credits, etc. 
  • Depreciation & Amortization: non-cash expenses caused by wear and tear on your tangible and intangible assets (like equipment, software, or leasehold improvements)
  • Personal & Discretionary Adjustments: total amount of non-essential items or services (like travel, cars, or training) that you purchased over the past year

When you enter your information for the past year, our quiz will instantly determine your current EBITDA margin. Keep in mind, if you are interested in joining a DSO, investors are looking for an EBITDA of at least 30%. 

Not quite there yet? Use our EBITDA quiz to tinker with your numbers and find out what needs to change to get your practice where you need it to be.  

Let’s Try It Out

This will be more fun when you’re playing with your own numbers, but until then, let’s see how things might work. Let’s say that for your practice…

Total revenue: $1,250,000

Net Income: $200,000

Interest: $20,000

Taxes: $40,000

Depreciation & Amortization: $5,000

Your EBITDA margin? 20%

Congratulations! By industry standards, you are doing great. You have moderate overhead costs, a high net income, and you are making great strides on the business side of your practice. 

With an EBITDA margin like this, you are getting close to the 30% margin you need to reach max profitability, have a comfortable position for retirement, or join a DSO. 

But how can you close that ten percent gap? Start tinkering with the numbers! When you play with our EBITDA quiz sliders, you can see what happens to your profitability margin as the numbers go up or down across the different categories. 

Get in Touch With the Right Partners for Success

If you need to work on your profitability, we’ve got you covered! When it’s time to get to work turning the numbers on those sliders into reality, NextLevel has the resources and the expertise you need to make real, lasting changes to your practice. There’s never been a better time to focus on optimizing your practice, and with NextLevel’s expert coaches on your side, you’ll be well equipped to meet any challenges that come your way.

Discover your EBITDA margin today with NextLevel’s free EBITDA quiz, and get started maximizing your practice’s potential.