Source: https://guthlabs.ai/docs/instruments/ebitda-operating-margin-builder/

instrument / verified-with-binding-errata

# EBITDA / Operating Margin Builder

The current ledger marks this instrument verified with errata that must be applied at binding time.

Status: **VERIFIED_WITH_ERRATA**Lifecycle: **verified-with-binding-errata**

## Inspectable records

[01**Overview**Purpose and lifecycle](<https://guthlabs.ai/docs/instruments/ebitda-operating-margin-builder/>)[02**Mechanism**Method and assumptions](<https://guthlabs.ai/docs/instruments/ebitda-operating-margin-builder/mechanism/>)[03**Implementation**Binding and validation](<https://guthlabs.ai/docs/instruments/ebitda-operating-margin-builder/implementation/>)[04**Qualification**Evidence and errata](<https://guthlabs.ai/docs/instruments/ebitda-operating-margin-builder/qualification/>)

## Ledger state

The current ledger marks this instrument verified with errata that must be applied at binding time.

**Area**: Finance, Economics & Business (educational only — never individualized investment, tax, or legal advice)

**Tranche**: tranche-5

**Evidence ID**: t5-093

**Ledger rows**: 1

No ledger note is attached.

## Review findings

The EBITDA formula and EBITDA margin are standard under the stated exclusions. The instrument needs explicit formulas and input constraints for every listed output, a defined set of margins, a zero-revenue policy, and an explicit monetary-unit convention before it can receive PASS.

### Formula and scope findings

- EBITDA=Revenue-COGS-OpEx is standard only when OpEx excludes D&A; the specification does not explicitly constrain user-entered opex to exclude D&A, creating a double-counting risk.

- Gross profit, operating income, and net income are listed as outputs but their formulas are not specified. Under standard waterfall definitions, gross profit=Revenue-COGS, operating income=EBITDA-D&A, and net income=operating income-interest-tax, subject to stated accounting assumptions.

- The listed singular margin formula defines EBITDA margin, but the output list says margins plural without defining gross margin, operating margin, or net-income margin.

- The formula for net income is missing and may omit other items such as non-operating income, extraordinary items, discontinued operations, or other adjustments.

### Unit assumptions

- Revenue, COGS, opex, D&A, interest, and tax are monetary amounts in the same currency and scale; no mixing of dollars with thousands or millions is permitted.

- Tax is assumed to be a tax expense amount, not a tax rate. Interest is assumed to be an interest expense amount.

- Opex excludes D&A, interest, and tax. D&A is separately entered and subtracted to derive operating income.

- Gross profit=Revenue-COGS; EBITDA=Revenue-COGS-opex; operating income=EBITDA-D&A; net income=operating income-interest-tax.

- Margins are ratios expressed as decimals: gross margin=gross profit/Revenue, EBITDA margin=EBITDA/Revenue, operating margin=operating income/Revenue, and net-income margin=net income/Revenue.

## Boundary hardening

**BREAK_CLAIMED** · SELF_FLAGGED

The zero-revenue case produces undefined margins and should be rejected or explicitly represented as undefined. The specification also leaves expense-sign conventions undocumented and provides no actual formula branch despite a branch-switch hazard test.

## Errata and corrections

### Tranche errata

**net_income(_margin)** · vector 1

220000

170000

field contradicts own working (300k−30k−100k=170k computed correctly in text)

## Inspectable example

4 review vectors are recorded. One source-bound sample is shown below.

````
{
  "inputs": {
    "revenue": 1000000,
    "COGS": 400000,
    "opex": 250000,
    "D&A": 50000,
    "interest": 30000,
    "tax": 100000,
    "unit": "USD"
  },
  "expected_outputs": {
    "gross_profit": 600000,
    "EBITDA": 350000,
    "operating_income": 300000,
    "net_income": 220000,
    "gross_margin": 0.6,
    "ebitda_margin": 0.35,
    "operating_margin": 0.3,
    "net_income_margin": 0.22
  },
  "working": "Gross profit = 1,000,000 - 400,000 = 600,000. EBITDA = 1,000,000 - 400,000 - 250,000 = 350,000. Operating income = 350,000 - 50,000 = 300,000. Net income = 300,000 - 30,000 - 100,000 = 170,000. Gross margin = 600,000 / 1,000,000 = 0.60. EBITDA margin = 350,000 / 1,000,000 = 0.35. Operating margin = 300,000 / 1,000,000 = 0.30. Net-income margin = 170,000 / 1,000,000 = 0.17."
}
````

## Related workflows

No source-defined multi-instrument workflow membership is recorded.

## Sources and evidence

These pointers bind the page to evidence. They do not grant authority or collapse verification into deployment.

- `VERIFIED_LEDGER.json · VERIFIED_WITH_ERRATA`

- `evidence-tranche5/tranche5-results.json`

- `BOUNDARY_HAZARD_CATALOG.json`