EBITDA Margin

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Definition

EBITDA Margin (TTM) is trailing twelve month earnings before interest, taxes, depreciation and amortization divided by trailing twelve month net sales.

EBITDA Margin (Quarterly) is the specified Quarter earnings before interest, taxes, depreciation and amortization divided by Quarter sales.

Investors look at this measurement to get a closer approximation of performance of the business relative to sales before adjusting for the capital structure of the business (debt vs. equity financing).

Though many investors use EBITDA for this reason, some argue that the exclusion of depreciation expenses fails to capture the ongoing economics of a business since depreciation expenses are a good proxy for the replacement costs of property, plant and equipment, which must be paid in the future to continue business operations.

Formula

EBITDA Margin (Quarterly) = EBITDA / Net Sales
EBITDA Margin (TTM) = EBITDA (TTM) / Net Sales (TTM)

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