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EBITDA Margin Calculator

Measure operating profitability with the EBITDA margin.

Result

15.00%

How it is calculated

EBITDA margin shows what share of revenue is left as operating profit before interest, taxes, depreciation and amortisation: EBITDA margin = EBITDA / Revenue × 100. EBITDA and revenue must be for the same period and in the same currency. Revenue has to be above zero. EBITDA may be negative, which gives a negative margin and signals an operating loss. The result is a percentage with two decimals. Because EBITDA leaves out capital costs and tax, a high margin does not by itself mean a company is profitable after those costs.

Worked example

A company has annual revenue of 12,000,000 and EBITDA of 1,800,000. Divide: 1,800,000 / 12,000,000 = 0.15. Multiply by 100. The EBITDA margin is 15.00%. In other words, for every 100 of sales, 15 remains as EBITDA before interest, tax, depreciation and amortisation.

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Common mistakes

  • Mixing periods, such as quarterly EBITDA over annual revenue.
  • Using net profit instead of EBITDA; the two differ by interest, tax, depreciation and amortisation.
  • Using net or gross revenue inconsistently when comparing companies, so the margins do not line up.
  • Comparing margins across industries. A software firm and a distributor usually have very different typical margins.
  • Reading a high margin as cash generation, as EBITDA ignores capital spending and working capital.

Sources

About this calculator

The EBITDA margin expresses a company's earnings before interest, taxes, depreciation and amortization (EBITDA) as a percentage of revenue: EBITDA ÷ revenue × 100. Because it strips out financing decisions (interest), tax jurisdictions, and non-cash accounting charges (depreciation/amortization), it's often used as a rough proxy for core operating profitability and cash-generating ability, independent of how a company is capitalized or how it depreciates assets.

Equity analysts, investment bankers and private equity investors rely heavily on EBITDA margin to compare operating efficiency across companies of different sizes, capital structures and tax regimes — it's especially common in valuation multiples like EV/EBITDA. Business owners also track it to benchmark against industry peers and to see how efficiently a dollar of revenue converts into operating cash flow before capital-structure and accounting effects.

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Comments (1)

  • Editorial team

    Before comparing two companies, check whether each EBITDA figure is reported or adjusted, because add-backs for one-off costs can lift the number a lot. Lease accounting matters too: under IFRS rules rent moves below the EBITDA line, so the same business can show a higher margin than under US rules. Pair this with capital spending to judge cash. Which kind of company are you analysing?

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