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 ?
Even though feeding predictions between the two configurations were similar, the modified design was predicted to have a slightly higher safety margin. Reduced turbulence combined with integral filtration means that application of the modified design would result in improvements in casting quality.
All in all, the budgetary stance in the programme may not provide a sufficient safety margin against breaching the 3% deficit threshold with normal macroeconomic fluctuations and does not provide for medium-term objective of a budgetary position of close to balance within the programme period.
The deserved point from a 1-1 home draw lifted the Seagulls off bottom place, but they are still six points below the safety margin.
Sufficient safety margin is required in an industrial process to allow for these things, and the SICOR fluid needed to be robustly formulated to cater to these variables.
Funds which were not "ring fenced" were used to clear the deficit, leaving the home without its safety margin of reserves.
The variations that many foundries have taken for granted not only mean unnecessary scrap but also that a high safety margin must be used in gating and risering systems, resulting in low yield.
There is not a large safety margin built into this deployment range.
This energy capacity gives these devices the ability to provide a greater safety margin, which could increase the chances that therapy will be successful for patients who may need more energy to correct their heart rhythm.
The UK does not provide a sufficient safety margin against breaching the 3% of GDP ceiling, according to the Commission's February 16 assessment of its updated convergence programme.
But University of Tokyo's Dr Katsufumi Sato said they "would not have a safety margin to fly in bad weather".
The revised programme will allow for a correction of the excessive deficit by 2008 if backed by sufficient measures and even then leaves only a small safety margin against breaching the 3% deficit ceiling allowed in the Growth and Stability Pact.