What is a good EBITDA percentage of revenue? (2023)

What is a good EBITDA percentage of revenue?

An EBITDA margin of 10% or more is considered good. For example, Company A has an EBITDA of $800,000 while their total revenue is $8,000,000. The EBITDA margin is 10%.

(Video) EBITDA vs Net Income vs Operating Profit vs. Gross Income - Understanding Profit Measurements
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What is a good ratio of EBITDA to revenue?

An EBITDA margin of 10% or more is typically considered good, as S&P-500-listed companies have EBITDA margins between 11% and 14% for the most part.

(Video) EBITDA Margin
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What percentage of revenue is EBITDA?

The higher a company's EBITDA margin is, the lower its operating expenses are in relation to total revenue. So, a firm with revenue totaling $125,000 and EBITDA of $15,000 would have an EBITDA margin of $15,000/$125,000 = 12%.

(Video) What is EBITDA? Why is an EBITDA Multiple Important in a Company Valuation? Expert St. Louis
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Should EBITDA be higher than revenue?

EBITDA is not required to be included in an income statement, but if it were, it would appear a few lines below the revenue line item. A business's EBITDA number will always be lower than its revenue figure, as certain operating expenses are deducted from it.

(Video) EBIT and EBITDA explained simply
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Is a 10% EBITDA good?

The EBITDA margin calculated using this equation shows the cash profit a business makes in a year. The margin can then be compared with another similar business in the same industry. An EBITDA margin of 10% or more is considered good.

(Video) EBITDA Margin | Formula | Calculation and Examples
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What is a good EBITDA by industry?

As shown, the EBITDA multiples for different industries/business sectors vary widely.
...
EBITDA Multiples By Industry.
IndustryEBITDA Average Multiple
Retail, food8.89
Utilities, excluding water12.74
Homebuilding10.52
Medical equipment and supplies32.70
10 more rows
Sep 9, 2021

(Video) What is EBITDA? | Basic Investment Terms #15
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How many times EBITDA is a company worth?

Using EBITDA to Strike a Deal

Generally, the multiple used is about four to six times EBITDA. However, prospective buyers and investors will push for a lower valuation — for instance, by using an average of the company's EBITDA over the past few years as a base number.

(Video) What is E B I T D A | E B I T D A margin & E B I T D A multiple | Advantages & Disadvantages
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Can EBITDA be more than 100%?

EBITDA margins can range from 1% to 100%, but they are almost always less than 100%. The reason is margin can only hit 100% if a company had no taxes, depreciation, or amortization for the period being calculated.

(Video) EBITDA vs Gross Margin vs Net Profit
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Does EBITDA equal revenue?

Earnings before interest, taxes, depreciation, and amortization (EBITDA) and revenue are financial performance measures of a business. The main difference between them is that revenue measures sales and other income activities, while EBITDA measures how profitable the business is.

(Video) EBITDA Margin: Calculation, Analysis, and Interpretation
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Is EBITDA revenue or profit?

Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is one of a few profit metrics. At its simplest, EBITDA focuses only on operational profitability, ignoring non-cash expenses by adding them back to Net Income. Revenue is defined as the income generated through a business' primary operations.

(Video) EBITDA vs Net Income | Are they Both Same? | Know the Top Differences!
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Does EBITDA include owners salary?

EBITDA is the primary measure of cash flow used to value mid to large-sized businesses and does not include the owner's salary as an adjustment.

(Video) Is EBITDA the same as gross profit?
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What is a reasonable EBITDA multiple for a small business?

The multiples vary by industry and could be in the range of three to six times EBITDA for a small to medium sized business, depending on market conditions. Many other factors can influence which multiple is used, including goodwill, intellectual property and the company's location.

What is a good EBITDA percentage of revenue? (2023)
What is a low EBITDA margin?

A low EBITDA margin indicates that a business has profitability problems as well as issues with cash flow. On the other hand, a relatively high EBITDA margin means that the business earnings are stable.

What is Apple's EBITDA margin?

Apple's ebitda margin for fiscal years ending September 2017 to 2021 averaged 30.5%. Apple's operated at median ebitda margin of 30.8% from fiscal years ending September 2017 to 2021. Looking back at the last five years, Apple's ebitda margin peaked in June 2022 at 33.4%.

Is net profit same as EBITDA?

EBITDA indicates the profit of the company before paying the expenses, taxes, depreciation, and amortization, while the net income is an indicator that calculates the total earnings of the company after paying the expenses, taxes, depreciation, and amortization. 2.

Why EBITDA is so important?

Understanding EBITDA calculation and evaluation is important for business owners for two main reasons. For one, EBITDA provides a clear idea of the company's value. Secondly, it demonstrates the company's worth to potential buyers and investors, painting a picture regarding growth opportunities for the company.

What is a typical EBITDA multiple?

For most businesses with EBITDA of $1,000,000 - $10,000,000, the EBITDA multiple will be in the general range of 4.0x to 6.5x, increasing as EBITDA increases. However, due to growth prospects, high tech and healthcare/biotech firms tend to earn EBITDA multiples for their industry above this average norm.

How many times revenue is a business worth?

Typically, valuing of business is determined by one-times sales, within a given range, and two times the sales revenue. What this means is that the valuing of the company can be between $1 million and $2 million, which depends on the selected multiple.

Is 4x EBITDA good?

An EV/EBITDA multiple of about 8x can be considered a very broad average for public companies in some industries, while in others, it could be higher or lower than that. For private companies, it will almost always be lower, often closer to around 4x.

What is a good enterprise value to revenue ratio?

What is considered a good EV/Revenue Ratio? EV-to-Revenue multiples are typically considered healthy when between 1x and 3x. If this ratio is higher, then it's considered that the stocks are over-valued, and it's not profitable for investors to invest in the company.

What is a good profitability ratio?

In general, businesses should aim for profit ratios between 10% and 20% while paying attention to their industry's average. Most industries usually consider ! 0% to be the average, whereas 20% is high, or above average.

What is a good valuation ratio?

The price-to-book (P/B) ratio has been favored by value investors for decades and is widely used by market analysts. Traditionally, any value under 1.0 is considered a good P/B value, indicating a potentially undervalued stock. However, value investors often consider stocks with a P/B value under 3.0.

What are the 3 valuation metrics?

While the P/E ratio is the most popular valuation metric, we think the price-to-sales, debt-to-equity, and enterprise value-to-EBITDA ratios are even more important.

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