Southwest has maintained an average operating margin (earnings before interest, taxes, depreciation and amortization as a percentage of revenue) of 18%.
Murodch lusts after the 35% operating margins (earnings before interest, taxes, depreciation and amortization as a percent of revenue) enjoyed by ESPN.
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Last season they posted an operating margin of 12% (in the sense of earnings before interest, taxes, depreciation and amortization as a percentage of revenue).
Sageworks analyzed private companies to see which industries have traditionally had slim EBITDA margins (Earnings Before Interest, Taxes, Depreciation, and Amortization divided by Total Revenue).
That is, after paying for labor and raw materials, they have at best 30 cents of the revenue dollar remaining to cover overhead and depreciation on their machinery.
They run their papers frugally, with operating profit (net before depreciation, interest and taxes) averaging 25% of revenue.
Today, the IRS issued Revenue Procedure 2013-21, which sets the annual depreciation limits for luxury autos.
As a result, capital expenditures outpace both depreciation (meaning net capital outlay) and capital expenditure growth rate exceeds the revenue growth rate.
Result: Operating profit (net before depreciation, interest and taxes) in the truck group rose to 15% of revenue last year, from 8% in 1996.
Half its business--48% of revenue and 49% of operating income (earnings before interest, taxes, depreciation and amortization)--comes from commercial aviation.
One of those I especially like now is May Department Stores (nyse: MAY - news - people ), America's largest such chain, at 50% of annual revenue, 4 times cash flow (in the sense of 2002 net income plus depreciation) and with a 4.1% dividend yield.
But that income included depreciation benefits from the company's third-quarter asset writeoff and didn't reflect the fact that quarterly revenue was down 10.2% from a year ago.
Still, in that backdrop you can buy it at only one times revenue, seven times trailing earnings and three times cash flow (in the sense of net income plus depreciation).
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