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

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

EBITDA Margin enables investors to make comparison between different companies because this measure eliminates leverage effects as well as depreciation policy and taxes.

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

Generally, the higher EBITDA Margin the better.

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