1. What is EBITDA Margin?

EBITDA Margin is a profitability ratio that measures how much EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) a company generates as a percentage of its revenue. It shows the company's operating profitability before non-operating expenses.

2. How Does the Calculator Work?

The calculator uses the EBITDA Margin formula:

Where:

• \( \text{EBITDA} \) — Earnings Before Interest, Taxes, Depreciation, and Amortization (in currency)
• \( \text{Revenue} \) — Total revenue or sales (in currency)

Explanation: The formula calculates what percentage of revenue remains as operating profit before accounting for interest, taxes, depreciation, and amortization.

3. Importance of EBITDA Margin

Details: EBITDA Margin is important because it allows investors to compare profitability between companies and industries by eliminating the effects of financing and accounting decisions. A higher margin indicates better operational efficiency.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What is a good EBITDA margin?
A: This varies by industry, but generally a margin above 10% is considered good, and above 20% is excellent.

Q2: How is EBITDA different from net profit?
A: EBITDA excludes interest, taxes, depreciation, and amortization, while net profit includes all expenses.

Q3: Why use EBITDA margin instead of net profit margin?
A: EBITDA margin provides a cleaner view of operational performance by removing the impact of capital structure and tax environments.

Q4: What are the limitations of EBITDA margin?
A: It ignores capital expenditures and working capital requirements, which can be significant for some businesses.

Q5: Can EBITDA margin be more than 100%?
A: Yes, if EBITDA exceeds revenue, which could happen in cases of significant non-operating income or accounting adjustments.