EBIT Margin

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EBIT Margin is a measure of company’s profitability. It is calculated as EBIT divided by Sales.

EBIT Margin represents company’s operating profitability because it shows what portion of Sales is converted to earnings before non-operating expenses such as Interest and taxes are charged.

EBIT Margin enables investors to make comparison between different companies because this measure eliminates leverage effects as well as taxes.

One should note that EBIT Margin may differ significantly across industries.

Generally, the higher EBIT Margin the better.

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