Margin of safety(redirected from factor 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.
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