EBITDA Margin

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DEFINITION of 'EBITDA Margin'

A measurement of a company's operating profitability. It is equal to earnings before interest, tax, depreciation and amortization (EBITDA) divided by total revenue. Because EBITDA excludes depreciation and amortization, EBITDA margin can provide an investor with a cleaner view of a company's core profitability.

INVESTOPEDIA EXPLAINS 'EBITDA Margin'

A firm with revenue totalling $125,000 and EBITDA of $15,000 would have an EBITDA margin of $15,000/$125,000 = 12%. The higher the EBITDA margin, the less operating expenses eat into a company's bottom line, leading to a more profitable operation.

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  1. What advantages does EBTIDA-margin have over other profitability ratios?

    The advantages that EBITDA margin has over other profitability ratios is that it measures a company's financial performance ... Read Full Answer >>
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  3. What is the difference between EBITDA margin and profit margin?

    Corporate accounting is required to adhere to the standards and practices collectively referred to as the generally accepted ... Read Full Answer >>
  4. Over what sort of time span should I be examining a company's EBITA margin?

    As with all profitability ratios, a company's earnings before interest, taxes, depreciation and amortization (EBITDA) margin ... Read Full Answer >>
  5. What is the difference between the return on total assets and an interest rate?

    Return on total assets (ROTA) represents one of the profitability metrics. It is calculated by taking a company's earnings ... Read Full Answer >>
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