Margin refers generally to the difference between a selling price and a cost — expressed in absolute terms (CHF margin) or as a percentage (margin rate). It takes specific forms depending on the analysis level: gross margin (revenue minus cost of goods sold), EBITDA margin, operating margin (EBIT margin) and net margin. In financial due diligence, the evolution of all margin levels across multiple periods is the most immediately readable indicator of operational health: margin compression signals competitive erosion, cost inflation or pricing pressure from clients or competitors.

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Example: a Swiss B2B services SME presents a CHF 12.0 million revenue with an EBITDA margin of 18% (CHF 2.16 million). Multi-year analysis reveals a deterioration from 23% to 18% — a 5-point compression driven by competitive intensification and personnel cost increases. This trend leads the analyst to revise the seller's projections downward and apply a normalised EBITDA margin of 19% in the DCF model.

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Hectelion analyses margins at all income statement levels as the primary operational quality indicator in every due diligence and valuation engagement.