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EBIT Margin

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Definition

An EBIT Margin is the operating earnings over operating sales. This margin allows investors to understand true business costs of running a company, because parts of a company's property, plant, and equipment will eventually need to be replaced as they get used, broken down, decayed, etc.

Lower EBIT Margins indicate lower profitability from a company. When comparing against its competitors, investors can determine if lower EBIT margins are due to the competitive landscape (where all companies are having lower margins) or a issue just within the company (where the company is facing lower sales and higher costs).

Formula

EBIT Margin (Quarterly) is quarterly operating earnings / quarterly sales.
EBIT Margin (TTM) is last four quarters of operating earnings divided last four quarters of sales.

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