Question

Given the following information for Smith Company's Northern Division, what is the division's EBITDA margin?

Revenue $44,140
Operating income 18,112
Depreciation 5,000
Amortization 1,422
Tax rate 20%

a. $37,718
b. $13,112
c. $24,534
d. $19,627

Answer 1

Answer:

EBITDA margin is 55.58%

Explanation:

EBITDA margin is computed as;

= EBITDA / Total revenue

Where,

EBITDA = Earnings before interest and taxes + depreciation + amortization

EBITDA margin = ($18,112 + $5,000 + $1,422) / $44,140

EBITDA margin = $24,534 / $44,140

EBITDA margin = 55.58%