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S45

EBITDA Margin Compression

Leverage / base / 6 to 12 months

What it detects

Core operating profitability, EBITDA over revenue, is either sitting below a thin-margin floor or compressing materially year-over-year. EBITDA margin isolates how much of each revenue dollar the business keeps as operating profit before financing costs, taxes, and non-cash charges. A margin that is thin, or that is falling fast, means the business is losing the cushion it needs to absorb a cost shock, service debt, or fund reinvestment.

Severity levels

  • MEDIUM
  • HIGH

Thresholds

  • EBITDA_MARGIN_COMPRESSION
  • EBITDA_MARGIN_FLOOR

Exact thresholds, formulas, and severity bands are omitted from this public view. The full methodology, with every figure, is available in the authenticated app.

When this signal does not apply

This signal needs revenue to measure a margin against, plus well-formed profit and depreciation inputs. A bank-feed-only export with no profit-and-loss statement is reported as not applicable rather than shown as a fabricated margin.

Sources

  • Aswath Damodaran
  • ISA [redacted] (IAASB)

SEE IT ON REAL NUMBERS

The exact thresholds, the formula, and your own figures are in the authenticated app. See it against a real, simulated dataset for Integra Executive Services, our public demo company, or connect your own QuickBooks Online account.

Get accessSee the nightly proof