Margin of safety


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Margin of safety

With respect to working capital management, the difference between (1) the amount of long-term financing and (2) the sum of fixed assets and the permanent component of current assets.

Margin of Safety

In business, the amount by which sales or other revenue can fall before it reaches the breakeven point. That is, the margin of safety is how much worse a company can do before it ceases to be profitable. For example, if a company's breakeven point is $200,000 per year, and it is currently producing $300,000, its margin of safety is $100,000. This is also called the safety margin.
References in periodicals archive ?
'Margin of safety' is the difference between the expected value of the asset and the price at which it is bought.
Historically, operators have relied on pressure testing to validate the required operating margin of safety. This includes mill and field testing, where standards have varied over the years.
The key to developing a strategy going forward is to know and maintain your margin of safety, which is based on recorded and verifiable data.
Two of the most useful calculations are the breakeven point and margin of safety. Breakeven and margin of safety are both part of a cost-volume-profit analysis, which means that we have to make some basic assumptions in order to perform and interpret our calculations.
We are restoring a reasonable margin of safety today, rather than risking a loss of confidence tomorrow.
"So the use-by dates have a margin of safety. It's quality they are concerned about rather than safety."
So you don't need as much of a margin of safety as you would if you were a typical couch potato," explained Neuhoff.
Still, the Food and Drug Administration reiterated that it believes the current margin of safety for BPA is low enough, though more study is needed.
Therefore, its safety margin is between 67 per cent and 150 per cent Co the widest margin of safety of any viable chemical halon replacement available on the market today.
The leaders Sunder land saw their lead at the top dwindle slightly as their nearest challengers, South Northumberland, picked up two more points from their game and their margin of safety is now down to just six.
The committee said camphor benzalkonium methosulphate is safe as a UV filter at concentrations of up to 6% in cosmetic sun preparations, however because of its "borderline margin of safety, its use in other cosmetics products is not recommended".