EBIT Margin

An EBIT Margin is the operating earnings (before interest and taxes) divided by operating sales. This margin allows investors to understand true business costs of running a company, because parts of a company's property, plant, and equipment will eventually need to be replaced as they get used, broken down, decayed, etc.
Lower EBIT Margins indicate lower profitability from a company. When comparing against its competitors, investors can determine if lower EBIT margins are due to the competitive landscape (where all companies are having lower margins) or an issue just within the company (where the company is facing lower sales and higher costs).

Calculated as: (Earnings before interest and tax÷ Sales revenue) X 100.