Thursday, June 13, 2013

What is EBIDTA Margin?

A great deal is talked about EBITDA margin in the TV, news and in the investors community. Have you ever wondered what does it means and why it is so important for the investors and the Investment analysts. EBITDA stands for Earnings Before Interest Tax Depreciation and Amortization. 

EBITDA Margin measures Company’s operating profitability. It has been given special importance in recent times by the corporates as well the investors. It helps to ensure the company is generating enough cash to stay in the business. It is also a way to measure the cash flow of a company's operations. It is calculated by taking EBITDA and dividing it by the total revenues.


A company with total revenues of $100,000 and EBITDA margin of $10,000 will have an EBITDA Margin of $10,000/$100,000 = 10%. Higher the EBITDA margin, the greater will the profitability of the company.

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