BREAKING DOWN 'EBITDA Margin' For example, a firm with revenue totaling 125,000 and EBITDA of 15,000 would have an EBITDA margin of 15,000/125,000 12. The higher the EBITDA margin, the smaller a. Loading the player. What is 'EBITDA Margin' EBITDA margin is a measurement of a company's operating profitability as a percentage of its total revenue. It is equal to earnings before interest, tax. If the larger company earned 1,250,000 in annual revenue but had an EBITDA margin of 5, it becomes clear that the smaller company operates more efficiently as a way to maximize profitability. This allows people to make informed business and investment decisions. Drawbacks of the EBITDA Margin The exclusion of debt has its drawbacks when measuring the performance of a company. For this reason. EBITDA is a financial number that measures a company's profitability before deductions that are considered somewhat superfluous to the business decision-making process. These deductions are interest, taxes, deprecation and amortization, which are. This means that a investor, owner or analyst can understand how much operating cash is generated for each dollar of revenue earned and use the margin as a comparative benchmark. Using the. GAAP, and companies can potentially skew EBITDA numbers. Because EBITDA excludes interest, depreciation, amortization and taxes, EBITDA margin can provide an investor, business owner or financial professional with a clear view of a company's operating profitability and cash flow.

Benefits of the EBITDA Margin. Calculating the EBITDA margin allows people to compare and contrast companies of different sizes in different industries because it breaks down operating profit as a percentage of.

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