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EBITDA Margin Calculator

Calculate EBITDA margin to measure operating profitability. Enter revenue and EBITDA to get your margin percentage and financial performance insights.

Calculate EBITDA Margin

Total Revenue ($)

Total revenue from all sources

EBITDA ($)

Earnings Before Interest, Taxes, Depreciation, and Amortization

Your Results

25.00%
EBITDA Margin
Excellent Profitability
Total Revenue
$1,000,000
EBITDA
$250,000

Related Calculators

EBITDA Margin Benchmarks by Industry

Technology & Software20-35%

High margin industry

  • • Low cost of goods sold
  • • Scalable business model
  • • High operating leverage
Healthcare & Pharma15-25%

Above average margins

  • • R&D investments
  • • Regulatory compliance costs
  • • Patent protection
Manufacturing10-15%

Moderate margins

  • • Capital intensive operations
  • • Equipment depreciation
  • • Raw material costs
Retail & E-commerce5-10%

Lower margin sector

  • • High competition
  • • Inventory management costs
  • • Thin profit margins
Food & Beverage8-12%

Variable margins

  • • Commodity price volatility
  • • Distribution costs
  • • Perishable inventory
Transportation & Logistics5-8%

Tight margin industry

  • • Fuel costs
  • • Labor intensive
  • • Regulatory compliance

How to Calculate EBITDA Margin

EBITDA Margin Formula

EBITDA Margin = (EBITDA ÷ Revenue) × 100%

Where:

• EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortization

• Revenue = Total revenue from all sources

Calculation Steps:

  1. 1
    Calculate EBITDA
    Net Income + Interest + Taxes + Depreciation + Amortization
  2. 2
    Identify Total Revenue
    Sum of all revenue streams for the period
  3. 3
    Divide EBITDA by Revenue
    Calculate the ratio and multiply by 100 for percentage

Important Considerations

⚠️ Financial Disclaimer

This calculator provides estimates for educational purposes. Consult financial professionals for investment decisions.

📊 Industry Context Matters

Compare margins within the same industry

  • • Different industries have different norms
  • • Business model affects margins
  • • Growth stage influences profitability
💹 Trend Analysis

Monitor margin trends over time

  • • Improving margins show efficiency gains
  • • Declining margins may signal issues
  • • Compare year-over-year changes
🔍 Limitations of EBITDA

EBITDA has important limitations

  • • Excludes capital expenditures
  • • Ignores working capital changes
  • • Not a GAAP measure
⚖️ Use Multiple Metrics

Don't rely on EBITDA Margin alone

  • • Consider cash flow metrics
  • • Review net profit margin
  • • Analyze return on equity (ROE)

Example Cases

Case 1: SaaS Company with Strong Margins

Financial Data:
Revenue: $5,000,000
EBITDA: $1,500,000
Industry: Software/SaaS
EBITDA Margin: 30.00%
Performance: Excellent
Analysis: Above industry average

Interpretation: This SaaS company demonstrates excellent operational efficiency with a 30% EBITDA margin, indicating strong pricing power and scalable operations typical of high-performing software businesses.

Case 2: Retail Business with Moderate Margins

Financial Data:
Revenue: $10,000,000
EBITDA: $800,000
Industry: Retail
EBITDA Margin: 8.00%
Performance: Fair
Analysis: Within industry range

Interpretation: This retail company shows fair profitability with an 8% EBITDA margin, which is typical for the retail sector due to competitive pricing pressures and inventory management costs.

Frequently Asked Questions

What is EBITDA Margin?
EBITDA Margin is a profitability ratio that measures a company's operating performance by comparing EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) to total revenue. It shows what percentage of revenue is converted into EBITDA, indicating operational efficiency before accounting for capital structure and tax effects.
How do you calculate EBITDA Margin?
EBITDA Margin is calculated by dividing EBITDA by total revenue and multiplying by 100 to get a percentage. The formula is: EBITDA Margin = (EBITDA ÷ Revenue) × 100%. For example, if a company has $250,000 EBITDA and $1,000,000 revenue, the EBITDA Margin is 25%.
What is a good EBITDA Margin?
A good EBITDA Margin varies by industry. Generally, 15-20% or higher is considered excellent, 10-15% is good, 5-10% is fair, and below 5% may indicate operational challenges. Technology and software companies often have margins above 20%, while retail and food services typically have lower margins (5-10%).
Why is EBITDA Margin important?
EBITDA Margin is important because it helps investors and analysts compare profitability across companies regardless of their capital structure, tax situation, or depreciation methods. It provides a clearer picture of operational efficiency and is commonly used in valuations, benchmarking, and assessing a company's ability to generate cash flow.
What's the difference between EBITDA Margin and Net Profit Margin?
EBITDA Margin focuses on operating profitability before interest, taxes, depreciation, and amortization, while Net Profit Margin includes all expenses and shows the final bottom-line profitability. EBITDA Margin is useful for comparing operational efficiency, while Net Profit Margin reflects the actual profit available to shareholders after all costs.
Can EBITDA Margin be negative?
Yes, EBITDA Margin can be negative if a company's operating expenses exceed its revenue, resulting in negative EBITDA. This indicates the company is not generating enough revenue to cover its basic operating costs and may be financially distressed or in an early growth stage with high operational expenses.