Know your metric
Importance of
EBITDA Margin
Provides a clear view of operational profitability and cash flow.
Operational Profitability
It helps understand profit generation before non-operating costs and taxes.
Cash Flow Insight
Indicates the cash-generating ability of core operations.
Investor Appeal
It is often used by investors to assess profitability without tax and interest expenses.
Drawbacks of
EBITDA Margin
Can be manipulated with accounting practices.
Non-Cash Expenses
Ignores costs like depreciation and amortization which can be significant.
Not a Net Profit Measure
Doesn't account for all costs, and can overstate financial health.
Investment Ignorance
Fails to consider future capital needs or investments.
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