EBITDA Margin
Calculate the EBITDA margin, a profitability ratio that measures the percentage of revenue that remains as earnings before interest, taxes, depreciation and amortization (EBITDA).
EBITDA margin approximates a company’s core operating profitability before the effects of financing decisions (interest), tax jurisdictions, and non-cash accounting choices around fixed and intangible assets (depreciation and amortization). This makes it a commonly used metric to compare operating performance across companies with different capital structures, tax regimes, and depreciation policies.
The formula is as follows:
\[\text{EBITDA Margin} = (\text{Operating Income} + \text{Depreciation and Amortization}) / \text{Revenue}\]Also known as: EBITDA-to-revenue ratio.
EBITDA Margin in Python
get_ebitda_margin is part of the Ratios module of the open-source Finance Toolkit. Install it with:
pip install financetoolkit -U
Then call get_ebitda_margin as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(["AAPL", "TSLA"], api_key="FINANCIAL_MODELING_PREP_KEY")
ebitda_margins = toolkit.ratios.get_ebitda_margin()
Parameters
get_ebitda_margin accepts the following parameters:
- rounding (int, optional): The number of decimals to round the results to. Defaults to 4.
- growth (bool, optional): Whether to calculate the growth of the ratios. Defaults to False.
- lag (int | str, optional): The lag to use for the growth calculation. Defaults to 1.
- standardize (bool, optional): Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False.
- trailing (int): Defines whether to select a trailing period. E.g. when selecting 4 with quarterly data, the TTM is calculated.