Definition:
EBITDA margin is the profit before depreciation, interest expense and tax, that a company makes divided by revenues. It is expressed as a percentage profit.
Example:
A company generates $50,000 of revenue in a month, with an EBITDA of $15,000.
EBITDA margin would be $15,000 / $50,000 or 30%.
Why it matters:
EBITDA margin ignores depreciation and interest, so indicates the cash generated per unit of revenue for the operating business, before any financing or tax considerations.
Definition:
EBITDA margin is the profit before depreciation, interest expense and tax, that a company makes divided by revenues. It is expressed as a percentage profit.
Example:
A company generates $50,000 of revenue in a month, with an EBITDA of $15,000.
EBITDA margin would be $15,000 / $50,000 or 30%.
Why it matters:
EBITDA margin ignores depreciation and interest, so indicates the cash generated per unit of revenue for the operating business, before any financing or tax considerations.
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