# EBIT margin

The EBIT margin is a financial ratio that measures the profitability of a company calculated without taking into account the effect of interest and taxes. It is calculated by dividing EBIT (earnings before interest and taxes) by sales or net income.

EBIT margin is also known as operating margin. It is characterized by reflecting the benefit generated by the economic activity of a company alone. It ignores the way in which it is financed and the intervention of the state or national policy.

## EBIT margin formula

The formula for ebit margin calculation is as follows:

EBIT margin = EBIT (Net profit + Tax + Interest) / Total Revenue

## How to calculate EBIT margin

We can calculate the EBIT margin by the information provided below:

 Details Amount in USD Revenue or Sales 100 Cost of goods sold 60 Administration expenses 20 Depreciation and Amortization 5 Financial income 3 Financial expenses 2 Corporate Tax 5 Net income 11

First, we calculate the EBIT by subtracting the income minus all the expenses of the list, except for the financial and taxes. Neither do we consider financial income.

Then we divide the result by sales.

EBIT margin = (100-60-20-5) / 100 = 0.15

So, EBIT margin is 0.15 or 15%