What this tool does
Shows EBITDA as a percentage of revenue. Enter EBITDA in the first field and revenue in the second. EBITDA is earnings before interest, taxes, depreciation, and amortisation.
How to use it
- Add depreciation and amortisation back to operating profit to get EBITDA.
- Enter that EBITDA in the first field.
- Enter revenue for the same period in the second.
- Run it to get EBITDA margin as a percentage.
Worked example
EBITDA 100 on revenue 200 is a 50% margin. EBITDA 30 on 200 is 15%.
Calculation method
Ratio
a/b*100Frequently asked questions
- Why look at EBITDA separately?
- To compare companies with different capital intensity and debt structures on operating performance alone. It is not cash flow, and it can flatter businesses with heavy depreciation.
- Is EBITDA a standard line item?
- No. You compute it from operating profit, and companies adjust it differently, so check how any reported figure was derived.
What this tool does not cover
It hides replacement capital needs and interest burden, so it is a poor basis for judging a leveraged company’s ability to pay.