What is EBITDA %?
The percentage of revenue remaining as EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).
Think of it like this
Like measuring a store's operational profit before accounting for rent, taxes, and equipment wear - pure operating efficiency.
Formula
EBITDA Margin = EBITDA ÷ Revenue × 100- EBITDA: Operating profit before D&A, interest, taxes
- Revenue: Total sales
Why it matters
- Shows operating efficiency independent of capital structure
- Useful for comparing companies with different debt levels
- Popular in M&A valuations
- Eliminates non-cash expenses
What's a good value?
< 10%
Low
Thin margins, commodity business
10-20%
Moderate
Average profitability
20-30%
Good
Solid operating leverage
> 30%
Excellent
Strong competitive advantages
Real-world example
Software companies often have 30%+ EBITDA margins while retailers may only have 5-10%.
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