MARGIN OF SAFETY - Accounts and Finance for Managers

Margin of safety is the excess volume of sales over the break even sales. It is highlighted in the for absolute sales or in percentage. It is the difference in between the actual sales and break even sales. It elucidates the extent in which sales can be reduced without incurring a loss.
Margin of Safety = Actual Sales - Break Even Sales
The greater the margin of safety leads to soundness of the firm's business.

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