EBITDA Margin Calculator
Enter total revenue and EBITDA to see the EBITDA margin, the costs before D&A and their share of revenue.
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EBITDA Margin Calculator
Our EBITDA Margin Calculator shows how much of each sale a business keeps as EBITDA, its earnings before interest, taxes, depreciation and amortization. Enter total revenue and EBITDA for the same period and the margin appears as you type, with the costs before D&A and their share of revenue. It suits business owners, investors, analysts and finance students who want to compare operating profitability across companies of different sizes, debt levels and tax positions.
Quick answer
EBITDA margin is EBITDA ÷ total revenue × 100: 540,000 ÷ 2,400,000 × 100 = 22.5%.
- Total revenue: net sales for the period, before any costs.
- EBITDA: revenue minus operating costs, with depreciation and amortization left out.
- Higher margin: more of each sale is left to pay for D&A, interest, taxes and owners.
- Can be negative: when operating costs before D&A are larger than revenue.
What Is EBITDA Margin?
EBITDA margin is a profitability ratio that expresses EBITDA as a percentage of total revenue:
= EBITDA ÷ Revenue × 100
Because it is a percentage, it lets you compare a small firm with a large one. A business with an EBITDA margin of 22.5% keeps 22.50 of every 100 in sales after paying for its goods, staff, rent and other running costs, before depreciation, amortization, interest and taxes are taken off. Leaving out those four items removes the effect of past equipment purchases, borrowing and tax rules, so the margin focuses on day-to-day operations.
How to Calculate EBITDA Margin
= 540,000 ÷ 2,400,000 × 100
= 22.5%
- Find total revenue. Take net sales from the income statement, such as 2,400,000.
- Find EBITDA. Subtract cost of goods sold (1,320,000) and selling and admin costs (540,000) from revenue to get 540,000, or add depreciation and amortization back to operating income.
- Divide. 540,000 ÷ 2,400,000 = 0.225.
- Multiply by 100. 0.225 × 100 = 22.5% EBITDA margin.
Finding EBITDA From the Income Statement
Most income statements do not show EBITDA, so you build it from the lines that are there. Both routes below give 540,000 for the example business:
| Method | Example |
|---|---|
| Revenue − COGS − SG&A | 2,400,000 − 1,320,000 − 540,000 = 540,000 |
| Operating income + D&A | 414,000 + 126,000 = 540,000 |
| Net income + interest + taxes + D&A | 270,000 + 36,000 + 108,000 + 126,000 = 540,000 |
SG&A here means selling, general and administrative costs with depreciation and amortization taken out. If D&A is buried inside those costs, look for it in the cash flow statement.
EBITDA Margin Examples
| EBITDA ÷ Revenue | Margin |
|---|---|
| 540,000 ÷ 2,400,000 | 22.5% |
| 102,000 ÷ 850,000 | 12% |
| 1,750,000 ÷ 5,000,000 | 35% |
| −48,000 ÷ 640,000 | −7.5% |
The third business earns the most EBITDA and keeps the largest share of each sale. The second keeps 12 of every 100, a thin margin that is normal in trading or retail. The fourth spends more on operations than it sells, so its EBITDA and margin are negative before any depreciation, interest or tax.
EBITDA Margin vs Other Margins
The same business, read at four points on its income statement:
| Margin | Value |
|---|---|
| Gross margin (1,080,000) | 45% |
| EBITDA margin (540,000) | 22.5% |
| Operating margin (414,000) | 17.25% |
| Net margin (270,000) | 11.25% |
Each margin is that profit figure ÷ 2,400,000 × 100. EBITDA margin is always at least as high as operating margin, because it adds depreciation and amortization back. The gap between the two (5.25 points here) shows how much of revenue goes on wear of equipment and other long-term assets.
What EBITDA Margin Is Used For
- Comparing companies. Firms of different sizes can be ranked on one percentage.
- Tracking efficiency. A rising margin over several years shows costs growing slower than sales.
- Forecasting EBITDA. Margin × expected revenue gives an EBITDA estimate: 22.5% of 4,800,000 is 1,080,000.
- Valuation. Buyers who price a business on an EV/EBITDA multiple watch the margin that drives EBITDA.
- Lending. Banks use EBITDA and its margin to judge how much debt a business can carry.
Limitations and Common Mistakes
- Ignoring capital spending. A high margin can hide heavy spending on equipment that D&A would show.
- Mixing periods. Take EBITDA and revenue from the same year or quarter.
- Counting one-off gains. Profit from selling an asset is not part of operations and inflates EBITDA.
- Comparing across industries. Software and utilities run far higher margins than retailers or builders.
- Treating it as cash. EBITDA leaves out interest, tax and working capital, so it is not cash flow.
- Not a GAAP measure. Companies define EBITDA in slightly different ways, so check what each one adds back.
Key Terms
- EBITDA
- Earnings before interest, taxes, depreciation and amortization.
- Revenue
- Net sales for the period, before any costs.
- D&A
- Depreciation and amortization: the cost of assets spread over their useful life.
- Operating margin
- Operating income (EBIT) as a percentage of revenue.
- Net margin
- Net income as a percentage of revenue.
How to Use the EBITDA Margin Calculator
- Enter total revenue. Type the net sales for the period, such as 2,400,000. Commas and a currency sign are fine.
- Enter EBITDA. Type EBITDA for the same period, such as 540,000. Use a minus sign if EBITDA is negative.
- Read and copy the result. The EBITDA margin appears as you type, with the working, the costs before D&A, their share of revenue and a bar showing EBITDA against costs. Press Copy to copy it, or Clear or Esc to start again.
Example: total revenue of 5,000,000 and EBITDA of 1,750,000. The EBITDA margin is 35%, from 1,750,000 ÷ 5,000,000 × 100.
Who Can Use This Calculator?
Frequently Asked Questions (FAQs)
How do you calculate EBITDA margin?
Divide EBITDA by total revenue and multiply by 100. EBITDA margin = EBITDA ÷ revenue × 100.
What is the EBITDA margin for EBITDA of 540,000 and revenue of 2,400,000?
It is 22.5%. 540,000 ÷ 2,400,000 = 0.225, and 0.225 × 100 = 22.5%.
What is a good EBITDA margin?
It depends on the industry. Software and utilities often run high margins while retailers and builders run thin ones, so compare a business with its own past results and with close competitors.
Can EBITDA margin be negative?
Yes. When operating costs before depreciation and amortization are larger than revenue, EBITDA is negative and so is the margin. For example, −48,000 ÷ 640,000 × 100 = −7.5%.
What is the difference between EBITDA margin and operating margin?
Operating margin uses EBIT, which is after depreciation and amortization. EBITDA margin adds them back, so it is always at least as high. In the example the EBITDA margin is 22.5% and the operating margin 17.25%.
Can EBITDA margin be more than 100%?
Not from normal operations, because EBITDA comes out of revenue. A figure above 100% usually means one-off gains were counted in EBITDA.
How do I estimate EBITDA from a margin?
Multiply the margin by revenue. A 22.5% margin on revenue of 4,800,000 gives EBITDA of 1,080,000.
Is the EBITDA Margin Calculator free?
Yes. It is completely free, needs no sign-up, and can be used as many times as you like.
Sources
- Wikipedia. Earnings before interest, taxes, depreciation and amortization.
- CFI. EBITDA margin: formula and definition.
- Wall Street Prep. EBITDA margin: formula and calculator.
- WallStreetMojo. EBITDA margin: formula, examples, vs gross margin.
Try our EBITDA Margin Calculator to see how much of each sale is EBITDA in seconds.