EBITDA margin is earnings before interest, taxes, depreciation, and amortization, divided by total revenue, expressed as a percentage
To find EBITDA margin, you take a company's EBITDA and divide it by its total revenue, then multiply by 100 to get a percentage. The formula is: (EBITDA ÷ Revenue) × 100 = EBITDA Margin %. A company with $10 million in EBITDA and $50 million in revenue would have a 20% EBITDA margin. This tells you what portion of every dollar the company brings in stays as operating profit before financing and tax costs.
You will find the numbers you need in the company's financial statements, which are public documents filed with the Securities and Exchange Commission (SEC) if the company trades on a U.S. stock exchange. The statements are also usually posted on the company's investor relations website. You do not need special software or a subscription to access them.
Key Takeaways
- EBITDA margin is calculated by dividing EBITDA by total revenue and multiplying by 100 to express it as a percentage.
- You can find revenue on the income statement; EBITDA must be calculated by starting with net income and adding back interest, taxes, depreciation, and amortization.
- Public companies file their financial statements with the SEC in documents called 10-K (annual) and 10-Q (quarterly) filings.
- A higher EBITDA margin means the company keeps more of its revenue as operating profit, though what counts as "high" varies by industry.
Where to find revenue on the income statement
Revenue is the first line item on a company's income statement, also called the profit and loss statement or P&L. It shows the total money the company brought in from selling its products or services during the period. You will see it labeled as "Total Revenue," "Net Revenue," or sometimes just "Sales."
For a public company, look at the 10-K filing (annual report) or the 10-Q filing (quarterly report). Both are available free on the SEC's EDGAR database at sec.gov/cgi-bin/browse-edgar. You can also find them on the company's website under "Investor Relations" or "SEC Filings." The income statement is usually the second or third financial statement in the filing.
How to calculate EBITDA from the income statement
EBITDA is not usually listed as a single line on the income statement. You have to build it yourself by starting with net income (the bottom line of the income statement) and adding back four items: interest expense, income tax expense, depreciation, and amortization.
The formula is: Net Income + Interest Expense + Income Tax Expense + Depreciation + Amortization = EBITDA. Each of these line items appears on the income statement or in the notes to the financial statements. Interest and tax expense are usually straightforward to spot. Depreciation and amortization may be listed separately on the income statement, or they may be grouped together on a line called "Depreciation and Amortization."
If you cannot find depreciation and amortization on the income statement, check the cash flow statement. It appears there as well, usually near the top under "Operating Activities." The cash flow statement is the third major financial statement in any filing.
Understanding what EBITDA margin tells you
EBITDA margin shows how much operating profit a company generates from each dollar of revenue. A 25% EBITDA margin means the company keeps 25 cents of every dollar as operating profit. A 10% margin means it keeps 10 cents. The higher the margin, the more efficient the company is at turning revenue into profit before paying interest, taxes, and accounting for wear on assets.
EBITDA margin is useful for comparing companies in the same industry, because it removes the effects of different financing structures, tax situations, and asset depreciation schedules. Two companies in the same business might have very different net income margins because one carries more debt or operates in a higher-tax state, but their EBITDA margins will show which one is actually more profitable at the operating level.
What counts as a "good" EBITDA margin depends entirely on the industry. Software companies often have EBITDA margins above 30%. Retail companies might run at 5% to 10%. Manufacturing can range from 10% to 20%. Always compare a company's EBITDA margin to its direct competitors, not to companies in other industries.
Where to find depreciation and amortization if they are not obvious
Depreciation and amortization are sometimes combined into a single line item on the income statement, labeled "Depreciation and Amortization" or "D&A." Other times they are listed separately. If you see neither on the income statement, they are almost always on the cash flow statement under "Operating Activities," often as the first or second line after net income.
In some cases, especially for large companies with complex operations, depreciation and amortization may be broken out further in the notes to the financial statements. The notes are the detailed explanations that follow the main financial statements. Look for a note titled "Property, Plant and Equipment" or "Intangible Assets" — these sections explain how much depreciation and amortization the company recorded during the period.
Step-by-step example with real numbers
Here is how to calculate EBITDA margin using a simplified example. Suppose you are looking at a company's 10-K and find these numbers on the income statement:
| Line Item | Amount |
| Total Revenue | $100 million |
| Net Income | $15 million |
| Interest Expense | $5 million |
| Income Tax Expense | $8 million |
| Depreciation and Amortization | $12 million |
First, calculate EBITDA: $15 million + $5 million + $8 million + $12 million = $40 million. Then divide by revenue: $40 million ÷ $100 million = 0.40. Multiply by 100 to express as a percentage: 0.40 × 100 = 40%. This company has a 40% EBITDA margin.
Frequently Asked Questions
Can I find EBITDA margin already calculated on financial websites?
Yes. Financial data sites like Yahoo Finance, Google Finance, and MarketWatch often display EBITDA margin for public companies. You can search for the company name and look for the "Financials" or "Key Statistics" tab. This is faster than calculating it yourself, but understanding how to calculate it helps you spot errors and understand what the number actually means.
Why is EBITDA margin different from net profit margin?
Net profit margin includes the effects of interest, taxes, depreciation, and amortization. EBITDA margin excludes all four. A company with high debt will have a lower net profit margin because it pays more interest, but its EBITDA margin will be higher and shows the true operating performance. That is why EBITDA margin is often more useful for comparing companies with different capital structures.
What if a company does not have depreciation or amortization?
Some companies, particularly service businesses or software companies with few physical assets, may have very little or no depreciation and amortization. In that case, EBITDA will be very close to operating income. You still include the line in the formula — it just equals zero or a very small number. The calculation method stays the same.
Where do I find the 10-K or 10-Q filing?
Go to sec.gov and use the EDGAR search tool, or search the company name plus "10-K" or "10-Q" in any search engine. Most companies also post their SEC filings directly on their investor relations website. The 10-K is filed once per year within 60 to 90 days after the company's fiscal year ends. The 10-Q is filed quarterly.
Does EBITDA margin work the same way for private companies?
The calculation is identical, but you will not find the financial statements on the SEC website. Private companies do not file with the SEC. You would need to obtain the financial statements directly from the company, a bank, or a business database that covers private companies. The math and meaning of the margin remain the same.