How this number is made
EBITDA margin is earnings before interest, tax, depreciation, and amortization, divided by revenue. It is a rough operating margin that ignores capital structure and the wearing out of assets. A high margin can still be a bad business if the depreciation you ignored is the real cost of staying open.
- Revenue is the top line for the same period as the EBITDA.
- If you only have operating income, this is the wrong page. Do not add back numbers you do not have.
Formula
Margin = EBITDA ÷ revenue.
Worked example
With the figures already in the form, ebitda margin is 20.0%.
Questions
Is EBITDA cash?
No. It ignores working-capital changes and real capital spending. It is a step toward cash, not cash.
Can it be negative?
Yes. The business did not cover the operating costs that EBITDA still includes.