The formula
EBITDA Margin = EBITDA ÷ Revenue. EBITDA is earnings before interest, tax, depreciation and amortisation — profit stripped of financing and accounting choices.
How to read it
Because it removes interest, tax, and depreciation, EBITDA margin gives a clean read on core operating profitability and makes companies with different debt levels and tax positions more comparable. Rising margins signal pricing power or efficiency; a steady decline is a warning.
EBITDA isn't cash. A company can show a healthy EBITDA margin yet weak free cash flow if capex or working capital is heavy — always sanity-check against cash.