Margin of Safety Budgeted Sales

Break Even Sales

Budgeted Sales
Break Even Sales

The margin of safety is the difference between actual sales and break even sales.

To calculate margin of safety you should use the following formula:
margin of safety = (budgeted sales - break even sales) / budgeted sales

The margin of safety is used in order to know how much sales can decrease before the company or a project becomes unprofitable.

Other people also used:

It's a measurement of a company's total debt relative to the amount invested by the owners and the earnings that have been retained over time.

The net profit is the amount of money a business earns after deducting all expenses over a specific period of time.

It's the firm's revenue after making several deductions such as discounts and returns.

It's a measurement of the net cash generated from the core functions of a company within a specified time period.