1. What is Adjusted EBITDA Margin?

Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) Margin is a profitability ratio that measures a company's operating profitability as a percentage of its total revenue, after adjusting for unusual or non-recurring items.

2. How Does the Calculator Work?

The calculator uses the Adjusted EBITDA Margin formula:

Where:

• \( \text{Adjusted EBITDA} \) — Earnings before interest, taxes, depreciation, and amortization, adjusted for unusual items
• \( \text{Revenue} \) — Total revenue or sales

Explanation: The formula shows what percentage of revenue remains as operating profit after accounting for operating expenses but before interest, taxes, and non-cash expenses, with adjustments for one-time items.

3. Importance of EBITDA Margin

Details: This metric is widely used to compare profitability between companies and industries because it eliminates the effects of financing and accounting decisions, focusing on core operating performance.

4. Using the Calculator

Tips: Enter adjusted EBITDA and revenue in the same currency units. Revenue must be greater than zero for a valid calculation.

5. Frequently Asked Questions (FAQ)

Q1: What's a good EBITDA margin?
A: This varies by industry, but generally, a margin above 10% is considered healthy, with 20%+ being excellent.

Q2: How is adjusted EBITDA different from regular EBITDA?
A: Adjusted EBITDA removes one-time, irregular, and non-recurring items to show normalized operating performance.

Q3: Why use margin instead of absolute EBITDA?
A: Margin allows comparison between companies of different sizes by showing profitability relative to revenue.

Q4: What are common EBITDA adjustments?
A: Typical adjustments include restructuring costs, asset write-downs, legal settlements, and stock-based compensation.

Q5: What are limitations of this metric?
A: It ignores capital expenditures and working capital needs, and can be manipulated through aggressive adjustments.