Definition
EBITDA margin measures operating profitability before capital structure effects, taxes, and non-cash charges. It's useful for comparing companies with different depreciation policies or capital intensities. However, it ignores real costs of capital investments.
Formula
EBITDA Margin = EBITDA / Revenue × 100%
Example
With $100M revenue and $35M EBITDA, EBITDA margin is 35%. At 10x EV/EBITDA multiple, implied EV/Sales is 3.5x (35% × 10).
FAQ
What is EBITDA Margin?
EBITDA as a percentage of revenue.
How do you calculate EBITDA Margin?
A common formula for EBITDA Margin is: EBITDA Margin = EBITDA / Revenue × 100%
Why is EBITDA Margin important?
EBITDA Margin helps investors evaluate profitability and make more informed decisions.