The ratio of EBITDA to sales (EBITDA margin) shows how much cash a company generates for every dollar of sales revenue before interest, taxes, depreciation and depreciation.
A low EBITDA-to-revenue ratio indicates that a company may be having problems with profitability as well as cash flow, while a high result may indicate a solid business with stable profits.
Because the ratio excludes the effect of debt interest, highly leveraged companies should be valued using this ratio.