EBITDA is an important component of financial multipliers*. They reflect the financial condition, performance and efficiency of the organization and provide an opportunity to clearly compare businesses with each other. This way, you can quickly start looking for changes, deviations, growth points.
Let’s consider the main, most important and useful coefficients
EBITDA margin is one of the types of profitability: EBITDA margin. It shows what percentage of total revenue is EBITDA. This multiple is useful for assessing the norway phone number library company’s operating efficiency and its ability to control costs. It is calculated as follows:
The higher the indicator, the better for the business
This will mean that the organization has relatively small operating costs in relation to total revenue, which, accordingly, increases its profitability. In simple words, the company earns more.
A normal indicator for EBITDA margin is considered to instagram reels come in many forms be 12% or more. If the ratio is lower, then, most likely, after paying all expenses (taxes, interest, depreciation), the business may be unprofitable.
Let’s imagine that the company “Metal Sever” has an EBITDA of 2 billion rubles, and revenue is 16 billion. The enterprise “Metal Yug” has an EBITDA of 3 billion, and revenue is 30 billion. In this case:
The degree of debt load of the company – Debt EBITDA
The ratio helps to estimate how long it will take the bzb directory company to pay off all its debt obligations at the current EBITDA level without attracting additional investments. It indicates the presence of problems, the financial stability of the company and its ability to service its own debt. Calculation formula:
It is believed that if the debt-EBITDA multiplier value exceeds 3-4 years, then the organization is over-indebted. The conditions do not allow it to develop actively. It will take a long time to repay the loan. Investors will not take risks and invest in such a company, since it will be difficult to receive good dividends.
A low ratio, on the contrary, indicates financial stability and the ability to cope with debt obligations now and in the future. Values may vary depending on the country and the specifics of the business.
Enterprise value
The multiple, or EV/EBITDA ratio, shows how many times the fair market value of the company EV — (Enterprise Value) exceeds its annual EBITDA. That is, how much annual profit, excluding taxes, depreciation, and interest on loans, the company must earn to recoup its market value.