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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
Points will be hard to come by, and there is every chance Sunderland's safety margin could be whittled down over the holidays by the clubs below them.
The conventional resistance [R.sub.ck] and single extreme action effect [E.sub.k] may be treated as statistically independent variables of random safety margins.
Finally, the calculation of safety margins, which involved an assumption of crossing time, used the minimum crossing distance for the type of roadway used in the study.
Reinforcement work appears already under way at some plants, but such efforts should be accelerated to recover the original safety margins that were reduced by the upward revisions in the quake-intensity assumptions.
Traditionally, a safety margin of at least 10 J between the maximum output of the pulse generator and the energy needed for defibrillation has been used because early studies indicate that lower safety margins were associated with high rates of failed defibrillation and sudden cardiac death.
CRS-100 is a proprietary attenuated strain of Listeria monocytogenes that has been designed by Cerus to increase safety margins while preserving its potential to trigger a powerful immune response.
"On one view they were at the limit of safety margins. On another view they had exceeded those safety margins."
Environmental Protection Agency-established thresholds of methylmercury exposure that were set with extremely conservative safety margins.
MCRT 39000X transmitters offer high safety margins with 400% overload ratings.
is a leader in the discovery and development of novel small molecule drugs regulating cytochrome P450s to treat skin diseases and cancer with enhanced efficacy and improved safety margins. To date, Cytochroma's drug discovery program has identified modulators of retinoic acid and calcitriol metabolism as drug candidates for the treatment of skin diseases and cancer.
"By choosing to drive at higher speeds, you greatly reduce your safety margins and in the unfortunate event of a collision, the risks of serious injuries are far greater," he said.