The Profitability Ratios

The Profitability Ratios

The Profitability Ratios

1. EBITDA Margin (Operating Profit Margin) • EBITDA Growth (CAGR)

2. PAT Margin • PAT Growth (CAGR)

3. Return on Equity (ROE)

4. Return on Assets (ROA)

5. Return on Capital Employed(ROCE)

EBITDA Margin

The Earnings before Interest Tax Depreciation & Amortization (EBITDA) Margin indicates the efficiency of the management. It tells us how efficient the company’s operating model is. EBITDA Margin tells us how profitable (in percentage terms) the company is at an operating level. It always makes sense to compare the EBITDA margin of the company versus its competitor to get a sense of the management’s efficiency in terms of managing their expense.